From: Arun Mehta <amehta@giasdl01.vsnl.net.in>
Date: Wed, 14 Aug 1996 08:07:25 +0800
To: Bart  Croughs <cypherpunks@toad.com>
Subject: re: National Socio-Economic Security Need for Encryption Technology
Message-ID: <1.5.4.32.19960813185919.002f9d2c@giasdl01.vsnl.net.in>
MIME-Version: 1.0
Content-Type: text/plain


Bart  Croughs wrote:
>I don't assume that the *total amount* of capital will be
lowered in the US when US capital moves abroad. I assume that the
amount of capital in the US will be *relatively lower*. So the
wages will be *relatively* lower (lower than when the capital
wouldn't have left the US), but not necessarily lower in any
absolute sense. I thought this was obvious, but since Arun Mehta
also misunderstood me, maybe I should have been more explicit here.

>	Henry Hazlitt in 'economics in one lesson' (p. 139): "The best
way to raise wages, therefore, is to raise marginal labor
productivity. This can be done by many methods: by an increase in
capital accumulation - i.e. by an increase in the machines with
which the workers are aided..."

Pardon me, but I'm still confused. When Hazlitt talks about how
many machines are employed, surely that's "absolute" capital, not
relative. If US capital is invested abroad sensibly, such that it
enriches the investors, they have more money to invest in
machines at home and thereby increase local productivity (and wages). 

Arun Mehta Phone +91-11-6841172, 6849103 amehta@cpsr.org
http://www.cerfnet.com/~amehta/  finger amehta@cerfnet.com for public key