38

INTERNATIONAL TRADE

countries to the same goods) they will tend to be lower in price.
Conversely they will tend to be higher if the effectiveness of labor
in producing them is small.
Concerning real wages also — wages in terms of commodities —
no general rule can be laid down. Most persons would say that
the people of the country where high wages prevail are more prosperous
 than those of countries with low wages. They may be or
may not be. They are indeed better off as purchasers and consumers
 of international commodities; these being at the same
prices everywhere. As regards domestic commodities, on which
much the larger part of their money income is spent, they may be
better off or may not be. It depends on the prices of these, which
depend in turn, as we have just seen, on the effectiveness of labor
in making them. The prices of domestic commodities may be
higher than in other countries, and the people of the high-moneywages
 country, tho prosperous as purchasers of foreign goods, may
be so much less prosperous in their domestic transactions that the
net balance may be against them : their commodity wages may be
less than in countries with low money wages.
I have just referred to the common but mistaken impression that
a country of high money wages is necessarily more prosperous than
one with low money wages. There are other common impressions
even more widespread and more unqualifiedly wrong. Perhaps
most familiar and most unfounded of all is the belief that complete
freedom of trade would bring about an equalization of money wages
the world over. It is a belief held especially in countries of high
wages like the United States, and it goes with — indeed, is a part
of — the most persuasive argument in favor of a policy of tariff
protection. It seems plain as a pikestaff to the average person —
to the average employer not less than to the average workman —
that the country in which money wages are low can undersell
the country paying high money wages; and that if the two
compete without restriction, wages must become the same in
both. The reasoning of the preceding chapters shows that there
is no such tendency to equalization. Countries with high money
wages trade with those of low money wages, to the advantage