Globalization benefits all.

Contrary to the letter by Steve Throssel in the Des Moines Register on July 2, 2012, globalization IS the way out of this mess. (See: Globalization not the way out of finance mess.) The only reason that people voluntarily trade with one another is because both parties gain from the trade. Only when government restricts trade are people made worse off. When government restricts trade at least one party is made to pay more for whatever they are trading. The benefits of trade restrictions go to those who are being protected at the cost of higher prices paid by those who are not protected. Often, it is ultimately the poorest people who pay the higher prices. Those who have few work skills will always have difficulty getting higher paying jobs. But putting up trade barriers raise prices for the working poor and at the same time make the automation of repetitive tasks more economical. In a free society, government should not prohibit or restrict the social interactions of people who are acting honestly, peacefully and voluntarily.

Reich is wrong.

Robert Reich is wrong in his opinion that the key to improving the sluggish economy is more spending by the middle class. The middle class is still mired in debt and needs to save more. This is a hard pill to swallow. Borrowing and spending can be an addiction, and just leads to a weaker economy.

Reich also wrote that we need to lift the earnings of middle class America by increasing taxes on the wealthy, increasing government spending on defense, infrastructure, higher education, and giving labor unions more power in bargaining with big businesses. (See The Register, 6/23/2012, Another View: Why the U.S. economy can’t get out of first gear, by Robert Reich. LInk: )

In fact, the best thing to boost middle class income on a sustainable basis is to increase the number of good private sector jobs. The best way to increase the amount and quality of private jobs is to keep government involvement in the economy to a minimum and let people peacefully cooperate with one another. Regulations often protect vested interests, welfare payments often lead to more welfare, and crony capitalist spending leads to more special interests who lobby to maintain and expand taxpayer money flowing to their favored industries.

Expanding government financed jobs takes money away from things that people actually want, and puts it into either non-productive jobs or things that people don’t really want. Government stimulus spending has a tendency to mis-allocate resources. Infrastructure spending builds bridges to nowhere, higher education spending results in tuition increases, and defense spending is completely wasteful economically, even when necessary and morally justified. Raising taxes on high income earners may temporarily transfer wealth from the rich to the poor, but, over time, pulling the rich down does not raise up the poor. And, taxing for the purpose of transferring wealth from one person to another is immoral.

As long as our government tries to manage the economy with low interest rates and subsidies to favored industries we will grow dependent on government and weaken industries that continue on the dole. We mostly need to reduce spending