From: "James A. Donald" <jamesd@echeque.com>
Date: Wed, 14 Aug 1996 04:52:31 +0800
To: Bart  Croughs <cypherpunks@toad.com>
Subject: re: National Socio-Economic Security Need for Encryption Technology
Message-ID: <199608131531.IAA19743@dns1.noc.best.net>
MIME-Version: 1.0
Content-Type: text/plain


At 09:29 AM 8/13/96 +-200, Bart  Croughs wrote:
> In several posts I gave quotes from famous Austrian economists 
> that support my statement that according to Austrian economists 
> wages depend on the amount of capital invested. 

You are wrong, and Perry is wrong, or rather you are misleading,
and Perry is wrong.

The statement "wages depend on the amount of capital invested". 
can have several meanings.  In the hands of the Austrians, it 
does not have the implications that you force 
on it, and this is what Perry ought to be complaining about,
though instead he is saying something quite different.

Obviously if everyone saves more money and invests it those
things that they find most profitable, this will raise both
total income and wages.

Obviously if the government takes control of other peoples
capital, and directs it to those places it finds most 
socially desirable, this will lower both total income
and wages.   

I assume we are in agreement so far.

Next question:  If the government restrains american businessmen
from investing outside America, will this alter the balance of
power between capital and labor inside America, in favor of labor,
while altering it against labor outside America.

Well if nothing else changed, yes it would, and if Perry denied
this he was wrong.

But of course capital is international, because it belongs to 
individuals, not to nations.  Since large amounts of money flow
in and out of the US, a bureaucratic intervention that
aimed to have the desired effect would have to be extensive
and drastic, amounting to fascist style socialism.

Again, I assume we are in agreement on this.

Next question:

     Competition between labor in the third world, and labor in 
     the US.

In those cases where labor is a minor factor in production, then 
the price of labor would be dominated by the cheapest source of labor.

Or rather the cheapest source of labor that is not controlled
by a government that capriciously robs and enslaves.  At present
the cheapest such labor source is probably Thailand, which is not
actually all that cheap these days, but is one hell of a lot cheaper
than the US.

But for *desirable jobs*, such as software engineering, the jobs
that people are getting excited about, the cost of labor in Thailand
is roughly comparable to the cost in America.

The kind of jobs that are being taken by cheap unskilled Thai labor,
are the jobs you cannot get anyone to do in America except for 
illegal immigrants.

We would expect this, because in any area where labor is the dominant
factor of production (such as engineering) a large supply of cheap 
labor will very swiftly CREATE the necessary capital.

Again, you might point to India as an infamous counter example, since
engineering labor is vastly cheaper in India.

But this is not a result of supply and demand causing an extreme 
misdistribution of wealth between capital and labor, but is a reflection of
the fact that an engineer who is subject to the power of the Indian
government is not worth very much, as is demonstrated by the fact
that companies with Indian engineering teams often spend a lot of money
to get their employees out of India.

Demand for Indian programmers is less than supply not because capital
has somehow failed to flow to India, but because an engineer in India
is not free to produce the value that engineers elsewhere are free
to produce.

To say the same thing another way:  The primary capital for engineers
is that held within engineers heads.  Therefore controls on capital
flows are controls on engineers, which are likely to benefit those 
doing the controlling, not those controlled.


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