As an ardent fan of Capitalism, I see its virtues every day and see how it has been one of the single greatest forces for human good that has ever existed in the world. I know that Objectivists also view laissez faire as something to be defended and promoted. Clearly global trade is something at the heart of Capitalism. My question has to do with the increasingly prevalent view that global trade has been nothing but a raw deal for American workers and that cheap Chinese made goods were traded for American jobs by "capitalist cabals". Indeed even major capitalists lend credence to this view when they are quoted as saying that there will be an "inevitable decline" in American living standards relative to the world ( http://www.businessinsider.com/billionaire-howard-marks-us-standards-of-living-are-likely-to-decline-relative-to-the-rest-of-the-world-2011-7 ).
The question I have for you is this, which one is it: Capitalism and global trade will lift all boats or has global trade just been a way to drive American workers' wages to the level of slave pay in 3rd world countries? If we are to defend capitalism and its associated global trading on moral grounds, how does one explain it to average Americans who see massive unemployment, a flood of Chinese made goods and wages spiraling lower and lower in the manufacturing area? Laissez faire would have perfectly open borders to trade, however what do you do with all the workers that used to buy all the goods who no longer can because they have no wages to buy them with (they got fired because it was cheaper to go to the 3rd world for equivalent workers) ? It seems like American business, in the era prior to Globalism was a bit of a closed, socialist system that put a "chicken in every pot" and kept everyone happy. Even untrained workers could make a living in some low tier factory and now that is vanishing. This is clearly leading to a democratic backlash against Globalism and even Capitalism. My question is: how to Objectivists see this situation given that they would have a stake in the promotion and defense of Capitalism? Stated otherwise: how does one defend Global Business to an angry group of workers who feel that all they got was a huge reduction in income, power and standard of living and who are starting to agitate for the "good ole' days" of the New Deal? We can choose to ignore it but we do so at our peril because it is not too hard to imagine a demagogue using the anger of millions of displaced workers to agitate for strongly anti-capitalist laws.
One defends Capitalism in today's climate by first noting that what we're experiencing does not include truly free trade, and is therefore not true Capitalism. For example, the US government provides financial incentives for companies to move overseas -- and China manipulates its exchange rate, so that labor and goods appear less expensive to their trading partners than they would otherwise be. Inside China, industries are heavily driven by cronyism of all kinds.
One of the underlying causes of the current problems resulting from the intensive offshoring of entire industries has been the culture of altruism. Government in the US felt that we should "help" the Chinese and other "poorer" countries.
In an Objectivist economy, the non-market incentives to move would not exist. In addition, though, both producers and consumers would be motivated to look at their choices more carefully and rationally. Is it really wise for the long term to base your business in a country run by Communists, where you can easily lose control or even ownership based on the whim of a bureaucrat? Where your IP is more likely to be stolen than protected? And if most of your customers are in the US, might you be hurting yourself by moving, by destroying jobs and thereby reducing the incomes of the people you're trying to sell to?
Equally important, on the consumer side: is buying a product made overseas always the best choice just because it's less expensive? Is a lower price worth the loss of jobs? Do you want to support a communist oligarchy? Every purchase you make is a form of voting; which companies' decisions do you want to support?
I should also point out that cheap goods made overseas aren't all bad. In the world of trade, it's always a two-way street. When you buy something, the seller gets your money, but you get the item you bought. If the seller is pricing the item below true market value -- as is the practice in China -- then the buyer comes out ahead, at least for a while. The problem comes when the industrial base is eroded to the point where the loss of jobs offsets the benefit of cheaper goods. With true Capitalism, this would self-adjust, and everyone comes out ahead. However, this natural adjustment process doesn't happen (or is delayed or distorted) when governments intervene.