How an Economy Grows and Why It Crashes

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The money saved would be available to be spent on other 
things…. skateboards perhaps. This would benefi t the skateboard 
companies that may still be located in the United States and 
that can deliver the most valuable product in their category.
But what about the workers of the domestic T-shirt 
manufacturers who lose their jobs? If their employers cannot 
fi nd ways to compete more effectively in the T-shirt business, 
it is true that the workers will have to fi nd other work. But 
it is not the aim of an economy to provide jobs. The goal is 
simply to maximize productivity. 
Society as a whole is not helped by perpetuating ineffi cient 
use of labor and capital. If the United States no longer has 
a competitive advantage in T-shirts, it must fi nd something 
else in which it does. 
If trade barriers were erected to protect those jobs, the cost 
of T-shirts would stay high. People would have less money to 
spend on skateboards (for instance), and those manufacturers 
would suffer. And so while it’s easy to put your fi nger on the 
job that is saved, it’s impossible to see the job that was not 
created. 
It makes no sense to waste our labor making things that can 
be produced more effi ciently abroad. If we focus on the 
things that we can make more effi ciently than anyone else, 
then we can trade those products for the things that others 
produce better. In the end we’ll have more stuff. 
Of course, the problem is that because of our artifi cially high 
currency, high taxes, and restrictive wage and labor laws, we 
just are not competitive in enough product categories. That 
has to change. 

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