Wednesday, October 9, 2013

What should American companies do in foreign nations?

Is it wrong for US companies to conduct business in foreign nations using business practices that would be illegal if done within our US borders?
I am a follower of Objectivism's economic philosophy, which is borrowed from the Austrian school of economics. It advocates for free trade. It says that any law that restricts voluntary trade transactions by giving one group rights and not others will increase the share of the pie for that one group while necessarily decreasing the size of the whole pie.
President Woodrow Wilson understood this well. He advocated for free maritime trade in his Fourteen Points at the end of WWI. He understood that peace requires prosperity, and that prosperity requires free trade. 
Now, there is a counter-argument I've recently heard of but I'm unsure of its validity. It involves the situation where a foreign country subsidizes the production of a product -- case in point, China subsidizes anything made from iron. And this is a sort of reverse tax. And the problem is that this is unfair treatment for domestic companies competing with those foreign companies. And the counter-argument says that we should be able to put a tariff on that imported foreign product in order to offset that reverse tariff within our nation's borders -- and the thing is that tariffs are a restriction on voluntary trade transactions.
Is this feasible? What could go wrong? Will the foreign country stop subsidizing? Or will the foreign companies just decide to put their efforts in exporting to other nations that don't put up a tariff on those products? And what does this mean for us? In any case, I'm going to post this question to the Fallible Ideas email list, where I post my ideas to get quality external criticism.

Now an interesting case is Apple's Chinese workers. Their working conditions are less than American standards, and Apple is heavily criticized for this by lots of Americans. The problem here is that those workers should not be compared to American workers, and instead they should be compared to their Chinese counterparts. Compared to them, Apple's Chinese workers have much better working conditions. So apple should be praised not vilified. 

I should mention that I disagree with some of our laws on labor -- they are anti-free-trade/anti-liberalism. Case in point, children are not allowed to work (except in certain cases). And this law was created in order to protect children from their parents who would force them to work. But this one-size-fits-all "solution" doesn't work. Sometimes a kid *wants* to work -- VOLUNTARILY!  So why shouldn't he be able to work?
I worked since 12 years old in my dad's convenience stores until age 19 -- this is one of the exceptions, that working for family is ok. Had I not worked for those 7 years, I would not have been successful in my first company that I started at age 19 while in college. And the thing is that so many children were not allowed to work like I was. They were stripped of their opportunity to learn. So this law acted as a discriminatory barrier for them -- it gave me rights that they were not given. So it increased my slice of the pie while necessarily decreasing the size of the whole pie. This is a parochial mistake. Its analogous to the situation where America championed equality under the law *for all*, while still supporting slavery. This is anti-liberalism. And its time for us to expand this great tradition to the last group of people that have so far been excluded -- children!

Liberalism - Liberalism in economics - Liberalism in parenting - CRC (international law on child labor)

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