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Published on January 22, 2004 in All Posts

Daddy Responds! A response about the Wal-Mart article I posted yesterday (below) from my dad, whose opinion I value highly:

Am I the only one who has read Adam Smith??? (Look him up if you have

to. Your encyclopedia will probably not fully express his place in

history. His influence in establishing free economies and democracies

in Europe is a phenomenal example of the pure power of ideas.)

Adam Smith simply says: if someone in another country wants to sell

(even underpriced subsidized) goods to you cheaper than you can make

them, –then LET HIM!! You get more of life’s basics for the same

price and therefore are in a position to produce higher value goods

yourself. Look at history. RCA was the big stock of the 1920’s

bubble. No radios have been produced in this country for years. Were

American workers thrown into mass unemployment? When Zenith, the last

domestic TV producer, quit, did the economy dive? Steelmaking made

America the dominant industrial power in the last century. Now there

is almost no primary steel production in this country. Automobile and

aircraft production are soon to go the same way. What happened in

these cases? America’s free economy just moved on to the next great

thing. As long as this economy remains the freest in the world, it

will also remain the strongest. Always innovating the next big

moneymaker. Always leading the way to the next economic step.

So why the gloom and doom? Resistance to change is one of the most

basic human reactions. (Read “inertia”.) No one likes to lose a job.

They will keep a dead ender because, by definition, they can’t see what

might be available in the future. This ability to view only the

present leads people who should know better to wring their hands over

“lost jobs”. The world is full of economists, credentialed, but not

credible, who simply do not understand history. If these people had

been one tenth right over the last decades, we would now have 80%

unemployment. And I don’t believe the new jobs will only be “service

jobs” as is so often said. Yes, that is where some end up, but the

rising generation of workers go into the rising industries. There are

not fewer jobs or worse jobs, just different jobs. That need for

change to different jobs is what frightens people and there are lots of

these diploma only economists who feed into this fear of change in the

people. Look at the example of Britain, an economic basket case in the

60’s. In the 80’s Margaret Thatcher shut down the unions, throwing 90%

of the mining industry out of work. And the result?? Britain has

regained its economic position in the world.

It is natural and easy to make decisions based on present conditions or

hardships. The problem is that those decisions will be aimed at

keeping things as they are. And keeping things as they are means

foregoing a future.

Thought question. We get very few of these subversive cheap goods from

South America and almost none from Africa. Why? They certainly have

an ocean of the absolute world’s cheapest labor.

Thought question. Japan, the world’s second largest economy, has been

stagnant for 15 years while America’s has grown apace and innovations

continue to come out of America. Why?

Thought question. India, with the world’s second largest pool of cheap

labor was on the other side of the world until just the last 10 years

and now work is going there daily. Why India all of a sudden?

In the fog of the recent political rhetoric about lost jobs going

overseas, has anyone noticed that the unemployment rate is falling?

Adam Smith might be dead, but his understanding of the world isn’t.

Adam Smith tells me not to be worried.

 
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