Re: National Socio-Economic Security Need for Encryption Technology

[Bart Croughs <bart.croughs@tip.nl>]

Sandy Sandfort wrote:

>On Tue, 13 Aug 1996, Bart Croughs wrote:

>> You claim that I must show that foreign capital investment
>> will not flow back to US workers. But in my original post, I
>>said:
> 
>> "Of course there are advantages also for the US (shareholders
>> will get higher returns, trade will increase), but how can you
>> proof that these advantages will offset the disadvantage of the
>> lowered amount of capital in the US? "
> 
>> You haven't answered this question yet. I don't claim that the
>> U.S. is worse off when US capital moves abroad. I only ask: how
>> can you proof that the US isn't worse off when US capital moves
>> abroad?

>The movement of capital from the US was an *assumption* in Bart's
>argument.  He has done nothing to show that it would in fact
>happen.  When he proves that, they it would be reasonable to
>expect me to offer proof that foreign capital will flow to the US.

So you are saying that no American capital is invested overseas? That would be a remarkable claim. But maybe you mean that I assume that there is a *net* movement of capital from the US to other countries. That is, you think that I assume that more US capital is invested in foreign countries, than there is capital invested from foreign countries in the US. But I don't assume this. I just assume that *some* American capital is invested overseas. That's enough for my question to be relevant. And even if there is absolutely no American capital invested abroad, there is still the question for other countries: if investors in country A decide to invest their capital abroad, how can you proof that this wouldn't have a negative impact on the standard of living of the workers in country A? 

>While I'm sure per capita capital investment is a *factor* in 
>determining how high wages are, it certainly is not the only
>factor.  It appears that Bart has fixated on this one to the
>exclusion of other (probably more important) factors.

For my argument to work, it really doesn't matter *how* important the amount of capital invested is in determining wages. My argument works the moment that you agree that, other things being equal, the higher the amount of capital invested in a country, the higher the wages will be in that country.

Bart Croughs