Your objection, I assume is that it slows growth. I assume by that you mean that plants would be less likely to move and thus less likely to increase the incomes of workers in the new country. Right?
It doesn't only reduce the chances of increasing the income of the workers in the new country. In the long run it reduces the chances of increasing the real income in the old country. When the resources (in this case workers, land, and at least a small part of the capital) in the US are freed to be applied to areas where PA or the US as a whole have a comparative advantage over Thailand, overall production from both countries increases. Usually in the long run production from each country increases. In the short run American production may go down as the resources cannot be transferred quickly to another industry, but the short run pain for America is less then the long run gain (even if it is not for all of the workers at the old plant in PA).
But its advantage is that it recognizes that economic activity is always a part of a social matrix. There are social costs when a plant is uprooted that the company ownership should share.
Many changes can disrupt this social matrix, but if we prevent change from trade, from businesses relocating (not just from PA to Thailand, but maybe from PA to Arkansas), from changes in consumer preferences, from new technologies, or repeal of laws that created protected monopolies or whatever, then overall people will become poorer because the available resources will be used less efficiently and also because the lower return on invested capital will cause less capital to get invested. If you try to establish who the losers are and have the winners compensate them, it will probably be too complex to administer, and whatever political or bureaucratic body that tried to administer it would be subject to corruption or special interest pressure or to making the decisions popularity contests rather then fair attempts at compensation. The political squabbles would be local, national and international. Thailand would probably lobby to reduce the compensation while some local PA community argues for as many bucks as it can get. Even if the body could ignore these pressures it would be just about impossible to determine fair compensation because you are talking about trying to compensate individuals or communities for benefits that they might have had if hypothetically the relocation or other change didn't happen. Its impossible to figure out such things because Even if some fair value could be realized and a super intelligent, extremely wise, and completely fair group of philosopher kings could be found to make the decisions it would not work as even these paragons of wisdom and fairness would not be able to properly manage a compensation system in a complex real economy in such a way as to produce fairness and economic efficiency for the same reason that planing any other part of the economy rarely works well. Its too complex and quickly changing to manage. Furthermore even a fair and relatively low level of compensation would still discourage change and this would lead to more economic stagnation.
Also even if all of these difficulties could be overcome it would violate the property rights of the owners to force them to continue the business in the same place or pay a penalty (compensation) for moving.
This barely touches on foreign affairs so if it is too OT we can move it elsewhere.
Tim |
