AFL-CIO president is wrong.

The letter to the editor in the Des Moines Register on July 4, 2012 by Mark Cooper, president of the South Central Iowa AFL-CIO,  makes clear that he refuses to recognize the laws of economics and want government to tip the balance in his favor.  He bemoaned, “The closure of more than 50,000 manufacturing facilities, the loss of nearly 6 million manufacturing jobs, and chronic trade deficits are all signs of our diminished industrial and innovative capability.”  In fact, over the past 30 years manufacturing output has more than doubled after adjusting for inflation.  U.S. manufacturers are very innovative and have increased capability.  Innovation and improvements in technology have allowed higher output with fewer jobs – especially fewer unskilled jobs.  It used to be that an honest, hard working person with few skills could get a job in a factory that paid well.  Over time, machines have been developed to do the strenuous, repetitive and dangerous tasks.  It is specifically innovation, not international trade and low wages in foreign countries, that has caused most of the job losses in manufacturing.

International free trade does put downward pressure on wages, but it also has the benefit or lowering the prices we pay for many products and services.  There have been real losses in jobs and manufacturing since the recession started in 2008, but the recession was caused by a government abetted speculative bubble in the housing market, not international trade.  Minimum wage laws price out of the market those with the least skills, and at the same time tends to keep prices high when they otherwise might fall.  What exactly would be wrong if wages fell 25% but prices fell by 50%.  Unfortunately, our government has a vested interest in making sure that we have inflation in our economy.  They are working very hard to push up the prices of houses, which probably has the biggest negative effect on relative poor people who don’t have a home but would like to buy one.

Philosophically, people should be free to peacefully and voluntarily exchange their labor and their property without interference by government.  When government gets started in regulating trade, those with the most political power will get protection and everyone else will pay higher prices.

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