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Originally Posted by BigBen931
Are you stating that to move production to a different location is free? There are setup costs, transportation costs, duties/tarriffs that you have mentioned already, lease costs, all of these things come with an explicit price.
The difference is that this new price bundle is STILL CHEAPER than continuing to pay 1st world wages... There is no such thing as a free lunch.
And there are costs to moving your labour to another location (haven't we all moved for a new job at one point or another?) but your proposition that labour is fixed to one locale is flawed. People move, and some of them move internationally, for work. The social costs of leaving friends and family behind is steep, but economics teaches us that a rational person has a wage rate such that they would be willing to move. There is a price, for example, that I would be willing to go to Iraq and drive a delivery truck full of explosives. To say that "Everyone has a price" is jaded and not the point; I said a RATIONAL person has a price. People do not act rationally sometimes. 
The invisible hand, you were wondering? Well, Adam Smith would probably say (and I hate to put words in his mouth) that the hand was quite busy in this regard:
The wages in the home country "Pushed" the capital into a 3rd world setting;
The Rent in the 3rd world setting "Pulled" production to set up in that location;
The Capital did not care where it went, and therefore being simultaneously pushed and pulled in the same direction, landed in 3rd world.
Oooooooh, I get turned on when I talk about invisible hands, land, labour and capital...
All together now: Economics is the coolest subject in the world! |
Your view of the constraints on capital movement versus labor movement are distorted.
When I use the term free, I am referring to ability, not cost.
Corporations have much more freedom to move laterally than labor does or consumers can and this is a direct result of their influence over the laws that govern such behavior.
It does not suffice to simply say that "some" people move internationally.
Movement of both labor and capital does not exist in a vacuum, they are bounded by law. I don't see you accounting for the influences powerful entities, such as capitalists and corporations, have over the movement of labor and ability to consume. I think you are giving a very superficial view of one's ability to follow capital from one nation to another--regardless of personal and social considerations.
I do not agree with your assesment of Adam Smith's position on this. I believe he would agree with me and that the "invisible hand," in so far as it exists, can only do so when labor and consumers can move laterally as easily as capital can. The legal and political domains have corrupted the regulations that economists argue exists naturally to control capitalism.
In the few posts you've responded to me on this subject, you've consistently not acknowledged my point in this regard. I remain curious why economists purport to follow the tenets of Adam Smith, yet violate one of his basic premises that labor and capital must be equally unfettered in their ability to follow one another.