Recently, there has been an increased exposure in the media of companies outsourcing jobs to other countries such as India or China. Because of this exposure, we have seen an upwelling of outrage at the “dirty capitalists pigs” for not caring for U.S. worker plight.

People who oppose free trade are again clamoring loudly for “fair trade” not free trade. What these people do not understand is that free trade is fair trade and fair trade is free trade; they are one and the same. The outraged people are asking, “How can American workers compete with such low wage workers” and “How dare these companies try to employ cheaper factors of production?”

According to Walter E. Williams, a distinguished professor of economics, the “total direct overseas investment of $796 billion, nearly $400 billion was made in Europe (Britain received 18percent of it), next was Canada ($91 billion), then Asia ($140 billion)…U.S. corporations exhibited a similar pattern with most workers in high wage countries such as England.” What is to be taken from these statistics is that low wages are not the only factor that is pushing companies to offshore outsourcing. The other factors that can be attributed to job loss in these countries with higher wages, or lower for that matter, are crushing government regulations and our overly litigious culture. Both are disincentives to job growth. Why would any firm add more jobs where they are going to be subject to foolish lawsuits and crushing regulations? Most firms will not put up with this kind of environment.

So, for American workers to compete with other countries, it is time that the government deregulate industries because regulations are simply a barrier around which the market will work. In this case, the market is working around the barriers through outsourcing offshore and causing Americans to lose their jobs because of excessive government regulation.

What many who oppose free trade are also now calling for is for Congress to stop U.S. firms from employing less costly factors of production through outsourcing jobs. This would seem, to the uneducated in economics, a great way to save American workers, except it is not. It will actually cause the wealth of all Americans to fall. I shall explain.

Labor and capital (i.e. machinery, etc.) are two of the main factors of production. As labor can be substituted more with capital, this means that the productivity of labor is rising. This causes the wealth of the country to rise, because we can produce more goods less expensively. If Congress passes any featherbedding law (i.e., an employment law to increase labor when it is not wanted) this causes a misallocation of resources and, therefore, reduces the amount of free capital that has greater value being spent elsewhere. This reduces the wealth of country.

It cannot be denied that the displaced workers are in a tough position, but progress is sometimes very difficult. There is not a single “lump of labor” but endless possibilities of new jobs with progress. Don’t fall for the “fair-trader’s” agenda; it will only hurt us all in the long run.

~ Trey Ragan is an economics senior