The Rise and Decline of Nations by Mancur Olson

Author:Mancur Olson [Olson, Mancur]
Language: eng
Format: epub
Published: 0101-01-01T00:00:00+00:00

Although the textbooks explain the other reasons for liberal or internationalist policies,

such policies can draw additional support from the theory offered here, because free

trade and factor movement evade and undercut distributional coalitions. If there is free

international trade, there are international markets out of the control of any lobbies. The

way in which free trade undermines cartelization of firms, and indirectly also reduces

monopoly power in the labor market, has already been discussed. Free movement of

productive factors and firms is no less subversive of distributional coalitions. If local

entrepreneurs are free to sell equities without constraint to foreigners as well as to

borrow abroad, those with less wealth or inferior connections at home will be better able

to get the capital needed for competition with established firms, and may even be able to

marshall enough resources to break into collusive oligopolies of large firms in industries

where there are substantial economies of scale. If foreign or multinational firms are

welcome to enter a country to produce and compete on an equal basis with local firms,

they will not only often bring new ideas with them but also make the local market more

competitive and perhaps destroy a cartel as well. That is one reason why they are

usually so unpopular-the consumers who freely choose to buy their goods and the

workers who choose to accept the new jobs they offer do not lose from the entry of the

multinationals, but these consumers and workers may be persuaded that this foreign

entry is undesirable by the propaganda of those who do.

The resistance to labor mobility across national borders has a similar inspiration.

Whereas rapid and massive immigration obviously can generate social tensions and

other costs, these costs are not the only reason for the barriers against foreign labor. The

restrictions on immigration and guest workers in many countries and communities are

promoted mainly by special-interest organizations representing the groups of workers

who have to compete with the in-migrants; labor unions obtain limitations on the inflow

of manual workers, medical societies impose stricter qualifying examinations for foreign-

trained physicians, and so on. The separate states of the United States, for example, not

only control admission into most professions, but often also into such diverse occupations

as cosmetology, barbering, acupuncture, and lightning-rod salesmen. These controls are

frequently used to keep out practitioners from other states. The nations of Western

Europe also vary greatly in the proportion of migrants and guest workers they have

admitted. Many other factors are involved, but the initial impression is that countries

with weaker labor unions have accepted relatively larger inflows of labor.

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