Bart Croughs wrote:

I don't assume that the *total amount* of capital will be lowered in the US when US capital moves abroad. I assume that the amount of capital in the US will be *relatively lower*. So the wages will be *relatively* lower (lower than when the capital wouldn't have left the US), but not necessarily lower in any absolute sense. I thought this was obvious, but since Arun Mehta also misunderstood me, maybe I should have been more explicit here.

Henry Hazlitt in 'economics in one lesson' (p. 139): "The best way to raise wages, therefore, is to raise marginal labor productivity. This can be done by many methods: by an increase in capital accumulation - i.e. by an increase in the machines with which the workers are aided..."

Pardon me, but I'm still confused. When Hazlitt talks about how many machines are employed, surely that's "absolute" capital, not relative. If US capital is invested abroad sensibly, such that it enriches the investors, they have more money to invest in machines at home and thereby increase local productivity (and wages). Arun Mehta Phone +91-11-6841172, 6849103 amehta@cpsr.org http://www.cerfnet.com/~amehta/ finger amehta@cerfnet.com for public key