The Freeman 1989 - The Ludwig von Mises Institute

20 THE FREEMAN. JANUARY 1989industry as it can obtain, no valid national purposecan be served by using high-paid labor forwork which can be done by less well-paid labor.But what about about the effect of the moveon the Snow Belt? Surprisingly, except in theshort run, the Snow Belt also gains from themove. By the side of the now famous principle"There ain't no such thing as a free lunch," weshould erect the principle "If you want morejobs and better jobs, you must destroy jobs."All economic history shows that the loss ofjobsis a pre-condition for the elevation and increaseof employment. For example, if New Englandhad not long ago lost most of its textile jobs tothe South, it would now be poorer, not richer,than it is. Indeed we can see this effect alreadyin the Snow Belt (if not yet everywhere in theRust Belt) which now has more and better jobsthan it had before the southward move ofjobs inrecent years.Suppose, however, that industry moves notfrom North to South, but from the U.S. to foreigncountries, perhaps to gain the advantage oflower wage rates. The results are still on balancelikely to be good for the U.S. and for thelosing areas, North or South. There are fourreasons:1. Profits come home from the foreign locationto the United States. Even if they are firstreinvested abroad, they will still ultimatelycome home.2. By moving abroad, American capital isable to produce cheaper goods for the Americanconsumer, who thus has a surplus income tobuy other home-produced goods or services andthereby to foster new American jobs.3. Opportunities open abroad for well-paidmanagerial and supervisory jobs for Americansin the migrated plants.4. The dollars paid for these cheaper American-producedimports ultimately come home tobuy other American goods or services. As exportindustries cannot be protected against foreigncompetition, it follows that their jobs havea sounder economic foundation than that ofprotectedindustries.Thus, on balance, the movement of industryabroad, when based on a realistic assessment ofrelative costs, benefits the United States. As forthe losing areas, the net effect is likely, exceptin the short run, to be beneficial for the samereasons as it is for the Snow Belt in the case ofmovement to the Sun Belt.The Concept of"Social Responsibility"What about the effect on "social responsibility"to which I referred above? This is sometimesthe most powerful motivator of publicopinion against both the "predator" and theplant mover. We need not here analyze the conceptof "social responsibility" at length. Weneed only state what full analysis establishes,that it is fundamentally misconceived. Businesseshave no right, still less a duty, to espouse"social responsibility" except where, as maywell happen, it coincides with and promotes thepurposes of lawful and successful business itself.The business of business is business, justas the business of a surgeon is surgery, not otherproblems of his patients. Business has no expertisein the solution of social problems, exceptwhere, as stated above, it coincides withgenuine business purposes. Worse still, havingno expertise in the matter, it is unlikely to beskilled or successful in its pursuit. Only citizens,acting individually or in relevant groups,have a right or duty to be concerned with socialproblems; and this includes businessmen, butacting as citizens, not as businessmen.The ideas and influences which seek to inhibitthe takeover process and the freedom ofbusinessmen to move their firms where theywill, are sure to undermine the production ofwealth and its impact on the admirable purposesoutlined in the Coolidge speech with which thisarticle opened. How deplorable it is that justwhen the American people are in some measurebeginning to learn to grapple with older interestsand influences inimical to wealth production,they are in growing numbers pursuing thewill-o-the-wisps to which these new debilitatinginfluences beckon them! 0