One solution would be a tariff on goods imported from countries that refuse to internalize environmental and social insurance costs. Such a tariff would aim not to protect an inefficient domestic industry but to protect an efficient national policy of setting prices to reflect the full costs of maintaining community. Wage levels are set mainly by population size and growth rates. Countries with large populations, rapidly growing, tend toward low wages. This is especially true because the laboring class tends to have a much higher birth rate than the owning class, often twice as high.
Labor is the main cost in most consumer goods.
Therefore, cheap labor means low prices, creating an advantage in trade. Capital therefore tends to move to low-wage countries. Herman Daly believes that the effect of unrestricted capital mobility is the same as the effect of unrestricted labor mobility. If the U.S. had unrestricted borders, we would enjoy endless cheap labor, but wages would plummet. Unrestricted capital flow will have the same effect, Daly says.