Economic asininities

By Walter Williams

Whenever there’s a World Trade Organization, Monetary Fund or World Bank meeting, crowds of idealistic, useful idiots show up to riot and protest against what they call globalization and capitalistic exploitation of Third World poor people. They charge Western multinational corporations with exploiting the poor through “slave” wages and child labor. Let’s examine this nonsense.

According to The Economist magazine, multinational corporations typically pay wages that are double the local wages in Third World countries but far below those paid in richer countries. That, to protesters, is evidence of exploitation of the poor – but is it?

For argument’s sake, suppose without the presence of a multinational corporation the best job a poor, uneducated Ugandan can land pays $2 a day. A multinational corporation builds a factory and hires that Ugandan for $4 a day – a wage well below what it pays workers in the United States. Plain common sense says that the Ugandan has been made better off by the presence of the multinational corporation and would be made worse off if the multinational corporation were politically pressured to leave. How much sense does it make to characterize an action that makes that Ugandan better off as exploitation?

You say, “OK, Williams, we understand that, but why did you call the demonstrators useful idiots?” Rich-country labor unions and some companies would benefit if higher costs and legal restrictions can be imposed on multinationals. It would mean that fewer jobs would go overseas, thus enabling union workers to demand higher wages. Fewer cheaper goods would permit some companies to charge higher prices for goods domestically produced. The idealistic, uninformed demonstrators are useful tools to achieve wage and profit objectives.

Speaking of jobs, President Bush is being criticized for the weak economy – he’s not creating enough jobs. Such a criticism stands at the height of ludicrousness. Politicians cannot create jobs. Or, more accurately put: They can only create one job by destroying another.

Think about it. Suppose Congress and the president spend a million dollars for a “stimulus package.” Will it be the Tooth Fairy, Santa Claus or the Easter Bunny who gives them the money? Obviously, the money must come from somewhere in the economy.

Since that’s true, we must ask what was that money going to be used for if Congress hadn’t taxed it away for a “stimulus package”? People would have spent the money purchasing goods that would have created or sustained employment. If Congress borrowed to finance the stimulus package, what activities had to be curtailed because of higher interest rates resulting from government borrowing?

By the way, if you disagree with me and insist that Congress and the president do have job-creation powers, then Williams has identical job creation powers. I can create lots of jobs simply by purchasing several hundred crowbars, distributing them to my George Mason University students and instructing them to go smash automobile windshields.

Think of all the jobs that would be created at auto repair shops. But those jobs would come at the expense of other jobs, because people having to spend a couple hundred dollars getting their windshields replaced wouldn’t have the same dollars to take their children to Disneyland, thereby reducing Disneyland jobs.

In general, presidents and congressmen have very limited power to do good for the economy and awesome power to do bad. The best good thing that politicians can do for the economy is to stop doing bad. In part, this can be achieved through reducing taxes and economic regulation, and staying out of our lives.