posted 10-23-2001 04:22 PM            

There's these two guys, Strongman and Feebler. Each of them has to build a shelter, and the bulk of the labor is sawing logs and pounding nails. They each need to get their shelter built as quickly as possible, so they can go out and do other work to buy stuff to feed their families.

Both men have the same size families and need the same space. They are both going to build simple shelters of the same size. All the material that they need is 2,000 logs apiece and 9,000 nails. Both men have a saw, a hammer and the nails, but that the logs must be cut and the nails pounded.

Strongman is a better builder. He can saw 100 boards an hour and pound 300 nails an hour.

Feebler can saw only 25 boards an hour and can pound only 200 nails an hour.

Strongman is four times as good as Feebler when it comes to sawing boards, and he is fifty percent better than Feebler is at pounding nails. In other words, Strongman is better in both cases, but un-equally better. Or, you could say that not only are the men unequal, they are what is far more important, unequally unequal. This is important, and it is a reason why our American Flags seem to be made in China. Let me explain further.

What will it require of Strongman to build his shelter? This is easy to figure out: if he must saw 2,000 logs at the rate of 100 an hour, it will take 20 hours of sawing. Similarly, if he must pound 9,000 nails at the rate of 300 an hour, that will require 30 hours. The 20 hours of sawing and the 30 hours of pounding make a total of 50 hours.

Feebler's position is different. He can saw 2,000 logs at the rate of only 25 an hour, and so sawing will require 80 hours for him. He can pound his 9,000 nails at the rate of only 200 an hour, and so pounding nails will require 45 hours. It will require 125 hours of work for him to build a shelter compared with only 50 for Strongman.

If you were Feebler, would it make sense for you to come up to Strongman and say, "Instead of us building our shelters separately, let's work together on both of them."? Sure it would! Hey, this guy's faster in both jobs, you'd definitely want Strongman for your partner!

But would it be a better deal for Strongman to take on Feebler as his partner? Yes, it would. Even though he can do both jobs better than Brother Feeb, he will make out, too. Figure the math.

If Strongman does all the sawing (because he's a whiz at that), he can do all the sawing for both houses in 40 hours. If Feebler does all the nailing (because he's not that much worse than Strongman), he can do all the nailing for both of them in 90 hours.

That means that Strongman gets his house built for 40 (as opposed to 50) hours of his own labor; while Feebler gets his house built for 90 (as opposed to 125) hours of his own labor.

It seems odd that a person who can do a particular job better than the second guy would actually hire that second guy to do the gig; but by doing so, the first guy gets to work on what he's really better at. There was a guy back in the 19th century called Ricardo that came up with this approach, and now economists call it Ricardo's Law.

Now what does this have to do with buying foreign stuff?

Well, sometimes the foreign stuff is either better or cheaper. Millions of Americans know that Malaysian or Indonesian goods are cheaper and millions of Americans believe that Japanese products are better. So, if you want to get the most bang for your buck, you buy cheap if the quality is not important (like toys) or you buy good if you don't have to pay too much of a premium (like cars).

But even if we could make toys as cheaply as the Malaysians could, it wouldn't make sense to do so, since the money we'd save by doing it ourselves isn't as good a deal as the extra money we'd make by doing the stuff we're really good at, like designing, building, and selling computer operating systems and Boeing aircraft.

We can buy toys or shoes or American flags made in America, but economically it's a double whammy to do so. The bad news is that, given our higher wages, unions, healthcare requirements, OSHA, etc. our production costs are much higher, and you, as the consumer, would have to pay twice as much. The other bad news is that, since Americans are too busy making toys or shoes to make operating systems or Boeing aircraft, they're not making as much money and therefore couldn't even afford the cheap foreign toys.

And that's the reason why such slogans as "Look for the Union Label" or "Buy USA" don't seem to work. American consumers know that if they do, they'll end up hurting themselves -- which means, in the long run, hurting their country, too.

Interestingly enough, if you want to look at Ricardo's Law from a Christian/Biblical perspective, hop over to http://www.visi.com/~contra_m/pc/1958/4-7law.html . Of course, once you're there, you realized that I shamelessly stole most of my rant from that particular article, but what the hey, I'm willing to admit that!

posted 10-23-2001 05:44 PM            

...Never mind. I figured it out. I'm forced to agree. My husband and I spent six years in the Detroit area. The mantra was, "Buy American," but the mantra didn't cover up mediocre engineering and shoddy workmanship. So we bought Japanese. I'm a patriot in terms of national defense, but a free marketeer in economics.

posted 10-24-2001 04:51 AM            

Your human rights points are good. However, and this is sad, they do tend to fall upon deaf ears. We have an amazing homeless population in our own country, as well as our fair share of slave labor and child labor. We cannot even seem to fix our own problems, and we need to start there, before we can fix anyone elses. I agree that what happens in "3rd World" conuntries is shameful. But we are no better in that respect.

On a different note, If the US is a "1st World" country and Malaysia is a "3rd World" country, who is a "2nd World" country?

------------------
Just my $0.02.

posted 10-24-2001 11:11 AM            

And I do think that we are too much of a consumer culture, in that we place more of our efforts into getting things and less than into doing things.

Of course it's easier for me to say that than you or LT3L1; as a kid raised overseas with servants (until we came back to the States, then I actually had to clean up my own room! Aaarrgh!)

But the bottom line is this. We are in a world economy and we cannot get out of it, even if we want to. And that means two things:

1. We trade goods and services with other people because it's in both of our interests to do so. Not all people take advantage of Ricardo's Law just to get toys for his kids or an Isuzu Trooper for his wife. The old guy on a fixed income can afford the food and clothing at K-Mart and still be able to pay for his medicine and an apartment -- because his shoes come from China, not upstate New York.

Our cost of goods is tied to our profits, sure; but the Chinese and Malaysian entrepreneurs make as much profit as American companies do. It is also tied to our costs of production. If you want us to have competitive prices, we are going to have to compete by lowering our costs of production. Get rid of the unions and the minimum wage and the 40-hour week and the medical benefits and the OSHA safety standards and the pollution laws. You don't want to do that? Do you consider those things to be necessary to our life and environment? Then our costs are going to stay higher than the Chinese factories, because they don't have that stuff to worry about!

2. Sometimes the trading partners do not live up to the moral standards of the other guy. In order to get cheap Chinese stuff we have to put up with the Chinese's actions. In order to get (relatively) cheap oil, we have to put up with the institutionalized sexism and lack of personal liberties in places like Saudi Arabia.

And it works both ways. An upstanding and decent Son of the Prophet in Saudi Arabia has to put up with those crass, money-mad infidel dogs of America, because they're the ones with the money and the good weapons. A cultured Frenchman must put up with les cochons Americains and their hideous Eurodisney and McDonalds, because they have all that tourist money to be spent in La Belle Paris. Alors!

International trade makes us deal with other people, even if we disagree with them. At the very least, it allows us to understand the other folks even if we don't like them. Maybe that will keep us from dropping bombs on each other. Sometimes it doesn't, of course; you could trace our most recent troubles to the fact that the fundamentalist Muslims see our culture -- and, therefore, us -- as a monster which must be destroyed (sorta like we see them). But we keep on trying, because it's better than the alternative.

Regards,

posted 10-24-2001 11:28 AM            

RE: WWIII, Now I suck at math but by my calculations if we count accurately... cold wars, international embargoes, and various misnomered multinational altercations...we are at about WWVI.