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All the Perl that's Practical to Extract and Report

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  • The effect of mobile capital is twofold:

        1. Move production to cheaper places
        2. Reduce the price of commodities

    This is entirely predictable, and exactly what we have seen happen. The
    standard justification given for free trade in intro Econ classes (production
    moves to where it's most efficient, and everyone wins -- "comparative
    advantage") works only under the assumption that capital does not move between
    the areas under consideration. Which might have been a reasonable assumption
    when Ricardo did his analysis in the early 1800's, but is obviously totally
    bogus now.

    As for whether this process hurts or helps US workers, I think it's a toss-up
    (sure, you lost your manufacturing job, but look how cheap all the stuff is at
    Wal-Mart!). Sometimes, there are very clearly disastrous social effects of
    radical capital shifts: think US Rust Belt (Gary, Indiana), or the equivalent
    area in northern England.

    Benefits accrue to firm owners, who get bigger profit margins, and "developing"
    areas, which get outside infrastructure and training. Though the jobs are often
    not so fun (think maquiladoras along the US-Mexico border), so one shouldn't get
    too excited about the Uplift of the Impoverished Masses.

    In some cases, in fact, capital moves to places where costs are lower because
    the local State makes less of an attempt to make firms pay long-term costs
    (toxic waste, air pollution, etc.). The actual production may in fact be less
    efficient, when viewed from a long-term point of view.

    And as for technological change -- it generally is driven by the owners, for the
    benefit of the owners, and thus usually against the workers. When my job as a
    bolt-tightener goes away, it doesn't mean I can now go home and take care of my
    children properly -- it means that I have to find another job (if I can).
    Meanwhile, bolts may be cheaper. At the very least, the owner no longer has to
    worry about the bolt-tightener going on strike.

    This dynamic has meant that, historically, workers have resisted labor-saving
    technological changes, resorting to violence in some cases. When the workers
    actually control production, this dynamic evaporates, and everyone works
    together to figure out the best way to accomplish the necessary tasks. This is
    what happened in spain in 1936. Agricultural production increased despite the
    young men being off at the front. Workers in Barcelona had access to medical
    care for the first time.

    Worker control also avoids much of the passive-resistance-to-the-boss problem of
    production, where workers don't try very hard because they hate their job and,
    in particular, their boss. This is especially and issue in creative endeavors
    (like programming), where motivation makes a HUGE difference.

    In addition, worker control allows cooperation. Anyone watching the free
    software explosion of the last ten years can see that in action. Workers are
    no longer artificially segmented into squabbling camps: they can now work
    together.

    • As for whether this process hurts or helps US workers, I think it's a toss-up (sure, you lost your manufacturing job, but look how cheap all the stuff is at Wal-Mart!). Sometimes, there are very clearly disastrous social effects of radical capital shifts: think US Rust Belt (Gary, Indiana), or the equivalent area in northern England.

      Yes, as a large-scale trend, loss of US jobs offshore is a very devistating issue that no one is really trying to fix in the US. I find it utterly depressing that Wal-Mart