“Why do they, while enjoying the well-being capitalism bestows on them, cast longing glances upon the ‘good old days’ of the past….?” – Ludwig von Mises, The Anti-Capitalistic Mentality, p. 3
Imagine for a moment 100 able-bodied individuals stranded on a deserted island with no access to any production or people off the island. The island’s inhabitants would be intensely poor in consideration of how little 100 people could produce in isolation. Life would be defined by endless drudgery.
Imagine, then, the prosperity surge that would result from the arrival of 200 more of the able-bodied. Does any reader seriously think that the arrival of 400 new “hands” would render the original inhabitants idle? Not a chance. Work isn’t finite—rather, it’s infinite. Four-hundred extra hands wouldn’t impoverish anyone as much as it would enable all of the deserted island’s inhabitants to further specialize their work. The more that toil is divided up, the more that people of varying talents can do the kind of work that most suits those talents.
Globalization Is Not a Threat—It's an Opportunity
It’s all a reminder that the entrance of billions around the world into the workforce isn’t a threat to “American jobs” as much as it’s a huge opportunity. Same with the rise of “robots” and other forms of automation. Whether human or mechanical, the mobilization of “hands” is what enables the individuals who comprise what we call an “economy” to do what they do best. Work divided improves us.
Now imagine if this deserted island of 300 were to divide itself into two countries solely for religious reasons, each with a population of 150. If so, would either “country” gain from tariffs meant to limit trade between the inhabitants of each? Should the island-dwellers reverse specialize so that neither country gains a food, clothing, or back-hoe “advantage”? Obviously not. Countries are just countries, and people are people. People gain the more that they can divide up work with others, regardless of where they are on a proverbial map.
The previous truth hopefully answers the somewhat separate question about tariffs. They would plainly harm every inhabitant simply because individuals (and that’s all an economy is) benefit the most when they have the greatest number vying to meet their needs. Trade is always and everywhere about products for products, so the more people we have competing to exchange their production for ours, the more goods and services our own production commands. In short, open trade means that we’re constantly getting a raise.
No one is harmed when the number of people competing to improve their lives through exchange grows. Globalization and the freedom to trade can only claim beneficiaries.
All of the above is a reminder that the “globalization” that needlessly has workers, pundits, and intellectuals up in arms is much ado about nothing. No one is harmed by the division of labor simply because no one is harmed by doing what elevates them the most. Just the same, no one is harmed when the number of people competing to improve their lives through exchange grows. Globalization and the freedom to trade can only claim beneficiaries.
This brings us to a recent speech given by Hoover Institution senior fellow Peter Berkowitz. Searching for the why behind the increasingly tight pairing of conservatism and populism, and more specifically the rise of Donald Trump, Berkowitz observed:
The lower-middle class is beset by plunging marriage rates, a rise in births to unwed mothers, erosion of men’s industriousness, surging crime, and a steep decline in religious faith. Culprits, particularly in the industrial heartland, include globalization, workplace automation, and opioids.
No doubt Berkowitz’s lecture will earn him all manner of praise for its alleged high-mindedness, but the words perhaps obscure what is a shallow collection of thoughts. Not only does Berkowitz’s reasoning not stand up to global realities, but it’s also not hard to say that his thinking amounts to a collection of nonsequiturs.
The Hong Kong Model
People free to produce have the greatest odds of being productive. The latter is particularly true when they’re also free to trade with anyone, regardless of country.
Regarding global realities, Hong Kong is the picture definition of “globalization.” Figure that Hong Kongers have no choice but to embrace what some have turned into a bad word. Since there’s very little “natural wealth” (wheat, meat, soybeans, copper, oil, etc.) to be found on what was once the most barren of rocks, Hong Kongers must import just about everything. But far from this engagement with the rest of the world reducing some in the population to unwed procreation, surging crime, and a lack of industriousness, the people thrive. Of course they do. People free to produce have the greatest odds of being productive. The latter is particularly true when they’re also free to trade with anyone, regardless of country. The division of labor that open trade presumes doesn’t injure people as much as it frees them to avoid career injury that’s an effect of doing work totally unrelated to one’s skills.
After that, not explained by Berkowitz is what engagement with the world and receipt of the world’s plenty has to do with bad marriages, sloth, crime, drug addiction, and anything else he can come up with. The attempted ties amount to a series of nonsequiturs. Berkowitz seems eager to create victims where there are none rather than stating what’s seemingly obvious: In a free country, some will make some really bad decisions that are often consistent with a lack of economic well-being. Such an assertion may seem heartless to some, but much more heartless is the trash-talking of economic freedom that has a near 1.000 batting average when it comes to lifting people out of brutal poverty as opposed to consigning them to it.
So having offered up explanations about troubled Americans that explained very little, Berkowitz predictably resorted to platitudes. “To restore America’s beleaguered lower-middle-class,” conservative “elites must listen more,” they “must” also “restore liberal education” while filling “the college curriculum’s gaping holes and counteract its illiberal lessons.” Really? It’s perhaps impolitic to think it let alone write it, but Berkowitz’s speech amounted to a big insult to the US and a rewrite of global history that has long correlated freedom from the heavy hand of government with prosperity. Freedom works. Always.
To this day, the world’s poorest continue to risk their lives in order to get to the United States. These people don’t need conservative elites to listen to them or require restored liberal education as much as they need to be left alone.
Lest Berkowitz forget, the US has long been built by incredibly poor people who knew they could right their circumstances if they were free personally and economically. To this day, the world’s poorest continue to risk their lives in order to get to the United States. These people don’t need conservative elites to listen to them or require restored liberal education as much as they need to be left alone. Often these people don’t even speak English. They come here not for guarantees, and they certainly don’t expect attention from think-tank scholars. Plus, there’s probably too little money for opioids, yet the world’s have-nots still come here to fix their poverty.
Back to the Americans lucky enough to be Americans and live in the country that much of the world’s inhabitants would give anything to live in, Berkowitz turns things upside down. He must know this. Having witnessed whole countries attain prosperity thanks to an end to the totalitarianism that cruelly stalked so much of the world in the 20th century, can Berkowitz really believe that too much freedom, too much openness to the rest of the world’s plenty, too much automation, and not enough liberal education explain the plight of some in the industrial heartland? That’s hard to countenance.
As opposed to relatively impoverished Americans being too exposed to globalization, history and logic tell us that beyond poor personal decision-making, the biggest error of America’s “forgotten” is one of living in parts of the US not exposed enough to the globalization that Berkowitz oddly finds fault with despite its abundantly prosperous track record.