Outsourcing will persist

Hello again, Professor Wolff. You say that the issue of outsourcing could be settled if the companies in the US were led by the workforce: they would never decide to move their business abroad. But there is a problem with this view: A capitalist can still just build an additional factory in a country with cheap labour, thereby making pressure on the prices also of the cooperatives. This can lead to bankruptcies and thereby to unemployment. How to deal with this? I mean, of course you can just employ trade barriers, but this wouldn't benefit anyone. Here's another option: make the dollar cheaper. But by which amount? Well, here I'm conservative. I think, one can let the market find an answer. But one can give it an incentive: The Fed (and one can easily imagine that this will become it's mandate) could just buy the surplus the capitalist has made in the currency in that he has made it. Then, the country that has let the capitalists in has the problem.

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  • Markus Pfeifer
    published this page in Ask Prof. Wolff 2016-08-29 11:15:15 -0400