Originally posted by: SacrilegeIf we become isolationists our standard of living will decrease.
You say that, based on what? With a population of over 300 million people, the U.S. economy would be able to have a sufficient division of labor so that the act of wealth production can be efficient.
However, most of the advocates of tariffs, the elimination of foreign work visas, and a reduction of immigration don't necessarily advocate outright isolationism, but rather "fair trade", tariffs, and a zero dollar trade deficit policy. Furthermore, any innovations discovered outside of the U.S. could always be reproduced or licensed for use in the U.S. It's not like ideas can't pass over borders, even isolationist ones.
My understanding of capitalism is that if the rest of the world suddenly disappeared, the U.S. economy would thrive regardless of it if only it had internal laissez-faire capitalism. In fact, it's even possible to find capitalists who oppose trading with certain nations as a matter of principle, such as China (such as the Objectivists).
The effects of outsourcing have been overstated in American society. There is only so much that a marginally English proficient Indian can do when he is thousands of miles away from the business associates he interacts with. A lot of the outsourcing hysteria on this board is because this is an IT website; there are many, many sectors which cannot be outsourced.
Anything that can be performed on a computer is now subject to global labor arbitrage; it's not just for manufacturing jobs anymore. Also, Americans don't have a monopoly on the ability to do knowledge-based college-education-requiring work nor do we have a monopoly on the ability to innovate or to be creative or to think abstractly. Those jobs that cannot be outsourced, the ones that are almost nailed to the ground, can be filled by imported foreigners on H-1B and L-1 visas and imported immigrants, including illegal immigrations.
You don't need more than a simple understanding of basic economics to understand that when the supply of labor increases dramatically almost overnight relative to the supply of capital in the world (jobs or the means of production in this context) that supply and demand dictates that wages--that a worker's share of his contribution to the act of wealth production--must decrease. By merging our nation's economy and labor market with third world labor markets that have billions of relatively poor people, the American standard of living must drop.
We have seen global labor arbitrage manifest itself in the past decade, which is why the current recession is not merely a recession, but rather a depression that is part of a downward trend that began around the turn of the century.
The overpopulation point is interesting.
It's a very serious Malthusian problem. As population increases, the costs of resources must increase or at least be higher than what they would be with a smaller population. It also increases the strain on the environment and increases population density. Most recently we've seen the price of oil increase and we've seen reports of water shortages in the Southeast and Southwest.
For America the bigger problem is the country must change to compete globally, with less emphasis on the American consumer, manufacturing jobs, and dead end low rung service jobs. As the global economy improves, growing middle classes in China, India, and other Asian nations should fuel growth.
We need those manufacturing jobs and some of the low rung service jobs to employ people who are not good at using their minds in the act of wealth production. Some people are just going to have a lower IQ than other people or won't work as hard to train to do knowledge-based work. We might be alright if we imported all the manufacturing goods we need if the sellers would purchase an equal value of our knowledge-based products. The problem is that they aren't going to be content doing the manufacturing jobs and letting us do the high-brow, high-value knowledge-based jobs; why should they be? Also, why the hell would they want to pay Americans to do intellectual labor when they could do it themselves for much less?
For Americans who are concerned about the health of the American economy and the well-being of the American people and Americans' rational selfish economic interests, it's time to begin questioning the old, tired dogmas about international trade and also that all trade constitutes an incidence of comparative advantage.
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