State Monopolies

When private individuals or firms of different countries deal with each other, there is little likelihood of their causing international incidents or unpleasantness; but when governments engage in business with each other, 40 there is always the possibility of intrigue and violation of "national honor." Do Tariffs Keep Wages High? Probably the most common argument in defense of tariffs is that they keep our domestic wages high; that they keep wages in this country from being reduced to the level of wages in the countries from which we im port. It is often put this way: "Tariffs protect us against the competition of low-paid foreign labor. If we accept their goods, we must accept their wage levels." To begin with, we must not lose sight of the reason why wages in this country are higher than in some others. The level of wages depends upon the productivity of the workers. Our workers are highly productive, largely be cause of the tools with which they work. In countries where there is a limited accumulation of capital, the tools of the workers are limited. Thus their productivity is low, and the result is low wages.