[thelist] rentacoder.com

[Ken Schaefer]

Oh boy. This thread is soooooo way off-topic it's kinda surreal.

That said, if one wants to discuss economics, one really should read an
Economics 101 text before one starts sprouting nonsense.

Sorry for being harsh, but the post below (as an example) is so bereft of
even the most fundamental understanding of contemporary economic reality
that it deserves a little bruising.

Adam Smith published a book in 1776 (An Inquiry into the Nature and Causes
of the Wealth of Nations) which highlighted how specialisation (the division
of labour) enables economic growth - how the same number of labour inputs
generates a greater number of outputs. This has been happening on an
individual level, an regional level, and a national level for hundeds of
years. It's been identified for about 225 years. It's funny how people still
don't get it.

In 1817 (that's also more than 200 years ago), David Ricardo published a
work called "On the Principles of Political Economy and Taxation" which
highlighted how comparative advantage enables greater economic wealth
through a process of specialisation that can be applied at an individual,
regional or national level.

These days, any number of things can be produced cheaper in other regions,
by other people, or in other countries. Whether it be cheap plastic toys,
XBox game consoles or staple cereals.

This hasn't lead to widespread economic impoverishment of the developed
world. Instead, the developed world has moved into other fields: legal and
accounting service, bio-technology, aerospace engineering and so on.

This has enabled consumers in the developed world to access products (of any
given quality) at cheaper prices, stretching their consumer dollar, and
making us all better off (in a traditional economic sense). People in the
developed world still have jobs - just as many as before, but generally
better paid and more rewarding.

Now, there are people on the list advocating the imposition of tariffs to
bring the cost of software up to "a fair market value", or to "protect
domestic developers". Hey, there are countries that do that for agricultural
products. Guess what happens? It becomes an enormous tax on domestic
consumers, and on other industries (since consumers have less to spend on
other products), whilst artifically sustaining an industry that shouldn't
exist, and diverting scarce economic resources from more productive uses.
Additionally, people in developing nations face yet another hurdle in
economic development.

Eventually, if taken too far, we'll end up in another Great Depression (it
was another great economist Maynard Keynes, who identified the stifling of
trade as one of the major causes of the continuation of the Depression).
Today, the widespread imposition of trade tariffs, and retaliatory action by
other countries would have an even more devastating impact upon the health
of the world economy, given the vastly increased amount of international
trade.

Sure, changing economic circumstances leads to pain (economists
euphemistically calls this "structural adjustment costs") - but that can be
soothed through government programs. What we shouldn't be trying to do is
stop the process. Instead, we need to continue innovating - developing new
technologies and industries rather than trying to "protect" the ones that we
have. That way we're all (both developed countries, and developing
countries) better off

Cheers
Ken


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: "David Bindel" <dbindel at austin.rr.com>
Subject: RE: [thelist] rentacoder.com


: bruce wrote:
: > are you willing to pay more for the things that you get that
: > cost less because they come from beyond the US, than what
: > they would cost if made here....
:
: Regardless of someone's 'yes' or 'no' answer to this question,
: you must keep in mind that for many people, it comes down
: to the quality of the product being bought.  I'm not saying that
: the US produces better products than offshore companies,
: or vice-versa.  People will buy from whoever provides it the
: cheapest, and due to different costs of living, many offshore
: companies can "afford" to offer their services at a mucher
: cheaper cost to buyers.
:
: To even the playing field, countries with higher costs of living could
: impose tariffs on imported digital goods.  That would make buyers think
: more about sending work to offshore companies; it wouldn't prevent it
: from happening, but it would even the playing field between more
: developed nations and lesser developed nations.  Companies in lesser
: developed nations aren't going to raise their prices significantly any
: time in the near future because doing so would destroy the advantage
: they have over more developed nations.
:
: > just remember...one could also take your argument and argue
: > that someone should really "pay" fair value for
: > Apache/Linux.... but who gets paid... or should we write a
: > check to microsoft when we get a copy of linux because they
: > were "hurt", given that we didn't buy Windows!!!!
:
: Importation tariffs are payed to the government, not to "hurting"
: companies.  Your example of paying Microsoft when people use Linux isn't
: similar, so it's irrelevant.
:
: > and remember, that i could arguer, that since i can get some
: > apps from someone for $8.00/hr.. that developers have been
: > overcharging me for awhile!!! who wins in the argument....
:
: Wow, good for you... But don't you see that there is a problem when
: developers are working in a technological field for less than minimum
: wage?  If prices are relative to the cost of living in a country, then
: prices are "fair."
:
: > and while we're at it... if you impose a higher fee on goods
: > that come into the US... what would happen if a foreign
: > country made you lower the cost you charged for your
: > software..... as implausible as it sounds..you'd be pissed...
:
: A tariff wouldn't force anyone to lower their costs.  If "low cost" is
: the *only* advantage to taking work to foreign markets, then changes
: ought to be made to make the foreign costs comparable to domestic costs
: in order to protect domestic  developers.