Sandy Sandfort wrote:
On Sun, 11 Aug 1996, Bart Croughs wrote:
If American companies are moving capital to Third World countries because of the low wages in these countries, then the workers in the Third World will of course be better off. But in the US, the amount of capital will be lowered. So the American workers will be able to get other jobs, but these jobs will pay less, because of the diminished amount of capital in the US.
The fallacy in this argument is the assumption that because some American capital moves overseas, there will be less capital available in the US for investment/wages. It doesn't contemplate infusion of foreign capital investments in American industries that have a competitive advantage over their foreign competition.
At least you agree that wages are determined by the amount of capital invested! As to your argument, I don't see why the movement of American capital overseas would lead to the infusion of foreign capital investments in American industries. It seems to me that these two processes work independently. If they do work independently, then the movement of American capital overseas will lead to less capital in the U.S. Bart Croughs