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May 2015 Web Final

May 2015

Labor, Wages, and Prices

Labor, Wages, and Prices by Matt Morrison As promised last month, in this entry we will find Adam Smith’s opinions on government attempts to restrict resources, which relates naturally to our discussion on labor and immigration. Labor is in a sense just another resource in production, and whenever high tariffs block resources, this encourages smuggling and its negative consequences. The same goes for immigration, as anyone from our border states can attest. From Smith: “An injudicious tax offers a great temptation to smuggling. But the penalties of smuggling must rise in proportion to the temptation. The law, contrary to all the ordinary principles of justice, first creates the temptation, and then punishes those who yield to it; and it commonly enhances the punishment, too, in proportion to the very circumstance which ought certainly to alleviate it, the temptation to commit the crime. …By subjecting the people to the frequent visits and the odious examination of the tax-gatherers, it may expose them to much unnecessary trouble, vexation, and oppression.” (The Wealth of Nations, Book V, Chapter 2) This futility in attempting to block goods or labor may be related directly to vain attempts to fix wages: “The price of labour…cannot be ascertained very accurately anywhere... Where wages are not regulated by law, all that we can pretend to determine is what are the most usual; and experience seems to show that law can never regulate them properly, though it has often pretended to do so.” (The Wealth of Nations, Book I, Chapter 8) It’s amusing that those who may otherwise favor the free movement of goods would favor the restriction of other resources such as labor. Smith was, in a sense, not an absolutely free market philosopher. He did favor light tariffs on foreign goods for revenue purposes (to match domestic production taxes); similarly, anyone of a fiscally sound mind can ascertain the benefit of taxing immigration moderately, rather than wasting money on trying to reverse it. Stopping immigration does not increase real wages, but taxing immigration can prevent inflation by decreasing our government’s need to borrow, therefore keeping wages strong. More importantly, instead of cutting immigration and increasing the face value of wages, we should focus on making American goods more price competitive, which would encourage more investment in this country and keep the cost of living low, giving everyone more purchasing power and, effectively, higher wages. Many people today want to “buy American,” yet so many are opposed to policies that would make this second nature. @ GAATS, You Relax, We do the Tax Halstead el CinoCa eHringHaus MCCartHur Mall 1502 Ehringhaus St. Bookkeeping, Payroll Services Income Tax, IFTA, etc. Free ITIN # w/paid Tax Return “LIBRE ITIN” 10% DIScouNT GAATS, LLC Godwin and Associates Tax Service, LLC TAX SERVICE 252-331-5859 Call office for details! We are next to Dunkin’ Donuts. Phone # : 252-771-0200 Circa 1928-1931 Model “A” wheel and tire Located at 2nd Tyme Around 102 Mullen Rd. South Mills. 12 Albemarle Tradewinds May 2015

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