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In any country, the wages commanded by the laborers who have comparable skills but who work in various industries are determined by the productivity of the least productive unit of labour, i.e. the unit of labour which works in the industry which has greatest economic disadvantages. We will represent the various opportunities of employment in a country like united states by Symbols. A standing for a group of industries in which we have exceptional economic advantage over foreign countries; B for a group in which our advantages are less; E , one in which they are still less; D, the group of industries in which they are the least of all. When our population is so small that all our labour can be engaged in the group represented by A, productivity of labour and (therefore wages) will be at their maximum. when our population increases so that some of the labour will have to work in group B, the wages of all labour must decline to the level of productivity in that group. But no employer, without government aid, will yet be able to afford to hire labour to exploit the opportunities, represented by E and D, unless there is a further increase in population. But suppose that the political party in power holds the belief that we should produce everything that we consume, that the opportunities represented by E and D should also be exploited. The commodities, that the industries composing C and D will produce have been hitherto obtained from abroad in exchange for commodities produce by A and B. The government now renders this difficult by imposing high duties upon the former class of commodities. This means that workers in A and B must pay higher prices for what they buy, but do not receive higher prices for what they sell. After the duty has gone into effect and the prices of commodities that can be produced by C and D have risch sufficiently enterprises will be able to hire labour at the wages prevailing in A and B and establish industries in C and D. So far as the remaining labours in A and B buy the products of C and D ,the difference between the price which they pay for these product and the price they would pay it they were permitted to import those products duty-free is a tax paid not to the government, but to the producers in C and D, to enable the later to remain in business. It is on uncompensated deduction from the natural earnings of the labourers in A and B. nor are the workers in C and D paid as much, estimated in purchasing power as they would have received if they had been allowed to remain in A and B under the earlier conditions. |
Index
Test 4
Answer Explanation To Test 4
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