Conversation with Georgists; 6

Exploring the ideas of protection free trade wages taxes automation and unemployment. These are just some of the topics to be heard on. Conversation with George's produced in collaboration with the Henry George school of social side. And now we're here is your host for a conversation with Georgia. The faculty of the Long Island extension of the Henry George School of Social Science a school devoted exclusively towards stimulating an interest in economics and the dissemination of the philosophy of Henry George through free courses in economics welcomes you to the sixth in a series of programs dealing with the subject of economics. It is our hope

to clarify and elucidate upon much of the vagueness that sets this all important area an area which affects all our lives. We feel that economics is everybody's concern regardless of sex profession education or occupation. This program conversation with joy just deals with economics in this vein and we hope to bring forth some answers to the current problems that face our nation and the world. My name is Stan Rubenstein director of the Long Island extension of the Henry George School and with us tonight three members of the faculty of our school. Each one well-versed in the field of economics. Having spent many years teaching our free courses in economics on Long Island. Mr Gerry Schweiker is an interior decorator. MR. Wayne Barry and Jane Eyre and Mr. Josh's Overman.

Our subject tonight deals with protection free trade and wages. A gentleman Henry George points out in a number of chapters in his book that protection is not needed to protect domestic wages from the threat of cheap foreign labor. And yet today many union leaders are protectionist for that very same reason. To protect the wages in this country of their membership Mr. Gerrish lika Why do you feel on this particular score about Henry George is correct when he states that the. Average wage earners in this country does not need to be protected. Well you might say a wage earner is primarily interested in what you can buy with his wages. Afterall $100 a week $200 a week

$300 a week. These are numbers. If you find out what $100 a week you can buy more than when you're making $200 a week. You may ask yourself how can this come about. The whole question then boils down to what is the cost of the physical things that you buy. This will determine what your wage scale really means to you. Now if unions as you specifically mention tell us by keeping out foreign goods by protecting the American industry. We can keep warm and working. Well maybe there's a point there. What do tell us that they can keep the wage scale higher. I'm not quite sure that's correct because if a particular particular piece of merchandise is brought into the country offering a price of $3 dollars and by protecting this industry we find that we have to pay $6 twice as much then it

must follow that our wage of $200. Why is $3 less when buying this item and therefore by examining the cost of war material that is sold in this country as compared to what we would have to pay if certain pieces of merchandise came in from Europe and by keeping out that particular merchandise and we know that we're losing effect of buying power and therefore the wage scale goes dry. Now I know that one of our main purposes tonight is to examine this perplexing and universal question of protection or free trade. And I think that we perhaps should examine as did Henry George in protection or free trade his book that he wrote during the 1880s. I think that we should undoubtedly examine all aspects of this question and I wanted to see if we can fathom from this some central truth if there is a central truth to be gotten from this. I'd first like to start off by

examining the protectionists point of view because I know that he does this quite often he does not go into his point of view. First he examines the other point of view in order to see the merits or demerits and then as he did in this book part by part he shows the inaccuracy as in the other side and therefore shows ability on his side. I'd like to try to attempt to do the same thing on this program by trying to see if we can find out what do protectionists claim is the effect of protection on wages and how valid is it. Mr. Wayne BERRY Well the protectionists chorus claim that protection keeps wages from falling to moral levels of other countries and. This is not valid at all. I mean me and Henry George pointed out in his very first book he wrote Progress and Poverty that

wages are determined by natural law not by any man made laws. Whether it's a tariff law or any other type it's it's a natural law. And everybody I begin I think can see that wages have to come out of production and that if we don't produce if somebody is just selling something at a higher price taking more out of your pocket as Jerry pointed out you're going to be hurt. And if we should be able to purchase anything anywhere in the world at the best that the best thing for the cheapest price is enough. People want things done to me George point out man's desires are on limited and we we certainly can. Man isn't afraid to work if shown that. But he's got to have opportunity. But the

things that should be any protection at all it does is help the industry it hurts the consumer. Now when you speak about natural was I know that usually we don't hear this expression or this concept expressed by many economists. Natural laws and yes yet this is one of the tenets this is one of the fundamentals I know of the Henry George School in the fall it was Henry George. Is this something unnatural about a government placing a tariff upon items coming into a country. Oh yes. To me it's it's kind of ridiculous to think that. Well and the engineering as I may have pointed out other times the engineers continually trying to overcome the barriers to trade better means of transportation better. Communication to help trading. And yet darn governments all over the world

continually think of making laws to do just the opposite. Building up naturally tariff barriers which is does more harm than good. And it's in that reason I think for a good many wars we had free trade throughout the world where all countries could actually get access to natural resources. There would be no need for fighting. I think that. Well it's just something that I can see that's why people think that they're their bosses while you're going to be put out of work if you leave. If we let this cheap product come then but that's to make something else. You know it's an interesting footnote when you speak about free trade or Tyrus or protection as being a cause of was certainly if we examined most if not all of the work was that we have one of the first things that we try to do with the enemy is the cut off trade.

And in a sense this I gather is what you're stating is one of tariff does during peacetime to to actually cut off trade. Now getting back to this idea of trade is it a natural thing for a man to want to trade with another fellow man. WANG Oh yeah that's goes back to the big beginning of civilization man produces something and then he may make a little more of it than he needs. Ready to trade for something else that someone else makes that he wants and that's a natural and natural thing that it's an invention of civilization that maybe you don't see animals don't but man has learned to trade through the years and anything that hinders it. This hinders him and his living. When can we be a little more specific on this. Do you have any examples to give us showing us that. Free trade is more beneficial than protection without getting into the

philosophy or the theory behind it. Are there any examples today or even yesterday in history to show us that. Free trade is more beneficial when free trade is allowed to operate. Well the shoe industry is one of the many highly protected and I in it because it was protected it became a monopoly as buyers assume machinery was consigned to machinery I was amazed when I went up that you machinery big factories up in New England and they were had such a monopoly that they made no attempt to try to improve. Upon them they would just settle back and they got their price for the shoes they didn't have to but they didn't let anybody else get into the market in this country and they just always clamoring for higher tariffs on their shoes coming in from the other countries just so they could make more on their shoes here. I think that

Belgium brick is another one that I always heard that Belgian bricks are fine a brick than what they were making up on the Hudson here and yet they clamored for a high protection now they have to transport those bricks 3000 miles this was back some years ago but damn and sell them cheaper than over here and I bet a brick. And yet they were protecting this brick maker of the brick brick yards in this country and I think this all any number of commodities that have kept their prices up just because of tariffs been been set up for them. Now what you're stating is that you feel that. Protection or tariffs. Is a way of the government encouraging inefficiency. That's right yes I think that YOU course the ones that want to get the tariffs are really the key.

Well the land owners they want to well they want to keep prices up on their natural resources and that will do it. OK I don't think that we can speak about wages and not talk about prices because as we are all aware one cannot go by one's increase in his take home pay unless one uses it in conjunction with the price level. Because certainly both are very much connected and if our wages increased 3 percent and the inflation gobbles up perhaps 5 percent of that then certainly we are. We are behind so I'd like to direct the next several questions to see what the effect is of protection on prices and I think that Gerri like I started to mention this before but Josh could you perhaps pursue this point and show was what effect.

That terrorists have upon the prices of the things that the wage earner the one supposedly is going to gain by protection what the effect is of prices on the products that he buys. Josh perhaps could you give us some of this. The effect on this. Well there was recently a copper strike all copper produces in the United States ceased industry wouldn't wouldn't meet the wage demands of of labor and the industry went out. Prior to this there was there was a tariff on on cop on incoming copper and with the advent of the strike the tariff was copper started coming in from abroad. And

much to the chagrin of Labor left Labor's prices were not diminished nor increased and copper still came through. Now do you feel therefore that this whole bit about wages going down when goods come in from another country cheaper. You feel that wages. On the contrary do not even go down when foreign goods come into a country. I know this guy. I believe that this was shown in the manufacture of refrigerators. Japanese refrigerators were coming in. Made with the cheap Japanese labor market in competition with American made refrigerators with a more more expensive labor market.

Yet Japanese refrigerators were not on a par economically nor efficiently as the American product showing that cheap labor. Is it an efficient labor. So what you're stating is that the labor that we have in this country which is in a sense without becoming nationalistic and as a sense more sophisticated and more skilled than the labor in other countries that if we paid a worker three dollars an hour that we will be getting more quality than another worker in another country that gets paid $1 an hour. Is this what you're stating that the American labor or the labor of any country does not have to fear what his fellow worker may

do in a distant country 9000 miles away. Because with it it carries more efficiency. That is so it Carrie. It has not only more efficiency but more labor know how labor produces produces not only the world but the means of producing the wealth. The idea of of fish and sea and the production of that article labor comes up with ideas to produce more. Then he is willing to produce more. And he comes up with ideas of producing more than is a poorly poorly paid labor journey perhaps we can follow through on this point that Josh mentioned concerning unskilled or poorly paid laborers and skilled laborers Perhaps it is we may have been in

this country is it very possible that we would sell products cheaper and better. Too many of the backward areas of the world because of what Josh is speaking about that's absolutely true. The United States has had the highest wage scale in the last hundred years at least than any other country in the world. And yet we outsell more. Another words we sell more goods in the world than anybody else. And yet we have the highest wage scale so you may say well how does that add up. Well actually I have to find out what the unit cost is gonna ask how much is a man making but ask me what how much. Let me state that again. Don't ask how much money he makes but how much of the product as we produce for that money. Now if you turn to a man in the United States and he works in the street getting paid $4 an hour and he's tapping out 10000 units and then turn to another area in a world where there's a man actually working with his hands and he's making

10 cents an hour and you say well how can we compete with this mythical cheap his wage scale how low it is or how many units does he turn out by how many can turn out 10 so if you lose one penny as a fellow making $4 an hour is turning out 10000 units in the course and so long that when you look at our record. Not only do we outsell the world so to speak but we sell more goods in foreign countries and foreign countries sell on our country meaning we have been a debtor nation since 1850 people owe us money because they want our goods and are willing to go into hock to get our goods. Therefore we must be more efficient because the rule of our market places you buy from the cheapest with where you can get the most you don't go to a place where you want to spend more and get less. And if people from other countries come to us to trade with us evidently we're doing a better job. And when the day comes that they don't come you won't have to put up tires. Don't just not come because we'll be charging more for the particular unit then they can either make themselves or get from another country somewhere else. Jerry let me

toss you a pervert here. Perhaps one of the reasons that the wages are so high in this country is because we have had protection. Throughout our history. How would you answer that not. Look the question is that maybe why we have been able to advance as rapidly and our industries have been able to advance as rapidly as they have is because of the very protection that you gentlemen are stating. Went home was some cataclysmic effect upon this country if we had free trade. Understand Us wages represent goods. If you make so many dollars your wages are only important us to the extent of what you can buy. When I say we are the hires we hold we have the highest paying wages in the world. I'm not talking about dollars. Germany had a great inflation and their workers were gone with basketballs and money but it wasn't worth really

what a basket cost. So think about what I say in these terms. The American worker gets more at the end of the week for the amount of effort that he puts in than any other Labor I'm a world. Another question impossible why. What is it about us here in the United States that makes itself. Are we the only ones that have a brain power we deny ones that come up with the ideas which is what is and I mean that there is a question that we might be able go into and possibly come up with an answer will give us some reason why it doesn't exist elsewhere. Can I go on. Surely. OK let me say this. You take two individuals working. One works in the United States producing a particular item and another person works at another place in the world of the same one both producing the same item both with the same brainpower. Yet one cannot produce the other in a more units at less cost for the same amount of units at less cost and you ask yourself why. What is it. That's where the natural resource I think comes in. If a

monopoly over natural resource reaches a point where it can force the producer to charge more because he has to pay more for the natural resource then you're going to end up with an imbalance and you're going to find certain groups in one country going to another group not because they can they can make it as well but the natural resource force is going to look elsewhere. And this kind of a monopoly forces up the price of commodities and therefore possibly the reason we have seven countries in Europe forming the out of seven and you know rates are not quite sure how they state it is that they have agreed that somehow they must lower the price of commodities to one another. I want to do this because they realize they can benefit from doing this so why is why bother. I'm trying to think of the manager who used to state let's go to the record books to find out what really is the story and I'd like to do the same with this we're speaking about protected industries and we're speaking about unprotected industries free trade and protection. Why do you have any information as a

comparison of wages and protected industries with those wages and unprotected for example. If we discover that of those wages in protected industries are higher than unprotected then I would say that a lot of the thinking that you gentlemen mentioned may be somewhat our own use however if we find out that there is not a difference in the protected and unprotected industries then I think that this certainly throws a new light onto this whole picture of protection and wages. WAYNE Well we mustn't forget that wages come out of production. And I don't know as I look at the wages from different industries. Sometimes our strongest union raises wages for their people without producing any more. And so I'm not too sure you can make a comparison but.

Free trade increases production there's no question about it Matt and George pointed that out increases the production of wealth and that's permitting an increase in wages because wages come from production. And I think we must never forget that. And that's just the opposite of love of high caste high caps Foster monopolies. And yet that is not the best thing for society. So when you speak about the increase in wages you suggest that we should not look in the direction of more tariffs as a means of increasing the wages within a country. You're tying it into the area of production. That's right yes. Free trade definitely doesn't create free trade or trade for an invention of mankind one sentence and all of

those like the wheel but it's something we we have to do. Otherwise you're going to separate free trade between the states is really what helped this country push ahead of some of these European countries are worst barriers up every direction I turn. I think people should be able to see that it began in this have a common market in a big and they wake up slowly getting back then to what I had stated in my introduction at the beginning of this program. You will be under the impression that union leaders and I use them only as an example and certainly not in any negative sense. But that union leaders would do more for their workers and workers in general if they were to accept the philosophy and policy of free trade rather than of protectionism as currently a number of them accept. Might

correct Wayne that that they would. They should look in the area of production if they want to increase wages and not look in a different area. And I think some of the labor leaders are beginning to study economics a little more and begin to see that that's where their wages do come from and not at the increase in workers wages when he doesn't produce anymore. You're just robbing Peter to pay Paul. I mean somebody's got to pay that woman according to our studio clock. Time is just about up. I wish to thank each one of you Mr Jerry Schleicher Mr Josh Goldman and Mr. Wayne very for appearing on tonight's conversation with Georges. They can read you at school welcomes the opportunity to send any interested listener. Information about the content. Tonight's program or

any of the numerous free courses which are offered by the school in economics on Long Island. If interested please write the Henry George School Post-office Box 54 Old Bethpage Long Island that address again is the Henry George School Post-office Box 54 Old Bethpage Long Island. Exploring the ideas of protection. Free trade wages taxes automation and the unemployed. This has been a conversation with George's. Produced by W. DHC Opsware University in Hempstead in cooperation with the

George school of social side. This is ANY our national educational radio network.