Doomsters, Evil I's, and tunnel-vision economics.

• Author: Van Cott, T. Norman
• Position: REFLECTIONS - Negative views about the U.S. economy

Economics is grounded in the proposition that people, individually and collectively, cannot command sufficient productive resources to satisfy unlimited consumption desires. Virtually all scholarship in economics involves explaining how alternative human arrangements direct productive resources among competing consumption objectives. (1)

The shortfall between consumption objectives and productive resources means that societies' economic ladders always have higher rungs, but how many rungs the societies climb--their overall living standards--is not arbitrary. It varies inversely with the amount of productive resources tied up in providing for each consumption objective. Thus, tying up fewer resources--including jobs--in each objective makes more rungs attainable. A case of less being more? You bet. (2)

Evil I's

This simple logic often gets thrown out the window when foreigners enable consumption objectives to be realized with fewer resources. The past few years have witnessed an upsurge of such defenestration. Media and political entrepreneurs have had a field day peddling sky-is-falling tales about eroding U.S. living standards caused by imports coming into the country and by immigrants forcing Americans out of "good" jobs into "bad" jobs. It is no overstatement to say that imports and immigrants have been so demonized that Evil I's is now an apt label. (3)

Some tales cleverly link the Evil I's to long-held anxieties about new technologies that allegedly eliminate jobs and reduce living standards. For example, software engineers and radiologists in China and India can now sell their services to Americans via the Internet. In other words, the Internet has turned foreign software engineers and radiologists into de facto immigrants who "ship" their services to the United States at virtually zero cost. Foreigners and technology combine to push Americans to lower rungs on their income ladders, or so say the doomsters. (4)

Doomsters have an easy sell to those who see the marketplace in adversarial terms, as a place where people vie for a fixed economic pie. What could be more obvious, they say, than the fact that foreigners' gains and Americans' losses are two sides of the same coin? Ostensibly in-depth media coverage promotes this vision. Scenes of shuttered U.S. factories are commonly juxtaposed with scenes of foreign factories at peak production. The clear implication is that foreign sellers gain what their American competitors lose.

I readily admit that this notion has an attractive simplicity. Both propositions--foreigners gain by selling in the United States, even at bargain-basement prices, and these same prices undermine American competitors--are true. Foreigners do not sell unless they gain by doing so, and new competition always has adverse effects on established producers.

Money Trails

Notwithstanding...