The Way to Protect

...There's no doubt what the National Association of Manufacturers wants to do about it, or the Business Roundtable, or the Reagan Administration They want to lower labor costs every way they can think of cut wages, cut fringe benefits, cut safety regulations, and to keep those who still have jobs in line, cut unemployment insurance and well are generally...

...No doubt many will argue against protecting the American standard of living Two arguments stand out The first purports to be consumer oriented Cheap imports, it says, benefit everybody But they don't benefit those millions whose jobs are taken by the imports, and those other millions who are being forced back to the poverty level The second argument purports to be producer oriented Restrictions on international trade, it says, threaten all our industries, because exports now represent our margin of profit To this argument there are three answers (1) Our really threatened industries-automobiles, steel, textiles, etc -have already lost their export markets, (2) our biggest export business-agriculture-will continue because the world needs it, and (3) we have at home an unexplored market larger than any we might lose Our 14 million unemployed, plus the millions of working poor, plus their dependents, comprise a "nation" of up to 50 million people-bigger than all but a handful of the 157 members of the UN In spite of our failures, these people are better educated than the rest o the world, have a better understanding of the work ethic, and are closer to the rest of us in needs and wants If our national and industrial policies were directed to helping these our fellow citizens, there would be plenty of domestic business to keep U S induxiry fully occupied and highly profitable...

...Foreign trade, as Smith saw it, served two purposes it enabled countries to exchange surpluses, and it facilitated the division of labor by expanding the market In furtherance of these ends he opposed the monopolies and bounties and other restraints on, or inducements to, trade that were root and branch of the mercantile system And he advocated independence for the colonies, largely because he judged trade with the nearby Continent more profitable...

...If you're old enough to read this, you're too old to live to see the day The question is, what do we want to do about it now...

...It will be objected that the propos-al can't work because it is impossible to compare foreign wage scales and working conditions with ours In reply, I would enquire how, if the comparisons can't be made, the noisy critics of the American workingman know he is overpaid What is proposed is merely the reverse of the critics' com The fact of the discrepancy in wages is accepted, but instead of saying that our fellow-citizen Americans are overpaid, we say that our fellow-human Orientals are underpaid Mathematically, there is no difference in what is said, morally, there is an astronomical difference...

...Is child labor employed...

...But a lot has happened in the past 200 years, especially in America, and this makes The Wealth of Nations a historical document, not a present help in trouble Our domestic market is now far larger than any world market Smith could imagine, and the division of labor has gone far beyond the 18 operations in the manufacture of pins that he immortalized More important, his merchant adventurers have been succeeded by our multinational conglomerates...

...What are the working conditions...

...Well, the way to protect is to protect First, we decide that certain of our important industries are threatened in our home market by severe competition from foreign industries Second, we determine whether that threat is made possible by wages or conditions that we would consider exploitative Third, we refuse entry to goods produced in grossly exploitative conditions...

...It does not interfere with foreigners' or multinationals' trade anywhere else in the world In every respect the proposal is analogous to our present laws refusing entry to contaminated foods or dangerous drugs or unsafe automobiles Those laws protect Americans as consumers, the proposed law would protect us as workers and, incidentally, as entrepreneurs...

...The Dismal Science THE WAY TO PROTECT BY GEORGE P BROCKWAY Last month (NL, August 8-22) I suggested that the world's Less Developed Countries might be better off if we denied their manufactures (mostly produced by multinationals) unlimited access to our markets Here I propose to look at the problem from our point of view, starting with the reiteration of some observations I made a year ago about the Atari Democrats' notion of inventing "sunrise" industries to replace "sunset" industries lost to foreign competition...

...The proposal is not complicated It does not cover all industry but only the industries we declare to be important and threatened in our home market It does not require elaborate cost accounting (as do the reciprocal trade provisions against "dumping") but simply straightforward questions of fact What are the wage scales...

...Everyone talks about automobiles, but they're comparatively well off Sol C Chaikin, president of the International Ladies' Garment Workers Union, points out that 25 years ago imports accounted for 5 per cent of the sales of ladies' and childrens' apparel, but it is estimated that this year they will account for over 50 per cent In the Peoples' Republic of China, garment workers are paid 16 cents an hour, in the Federal Republic of China, the rate is 57 cents, and in Hong Kong it's a little over a dollar Does anyone seriously propose to reduce American wages (which in the garment industry are already low) to these levels...

...The New York Times ran a story recently about the Sinchu Science-Based Industrial Park, currently being developed in Taiwan "Sinchu has all the ingredients of Silicon Valley 20 years ago," says Irving Ho, the park's director That may be commercial puffery, but why not...

...We'd better face it until the world standard of living is brought up to ours, there is nothing whatever that cannot be manufactured less expensively abroad than here Nothing whatever How long will it take for the world standard to approach ours...

...Today's problem with foreign trade is that our industries are losing out to foreign competition or are being shipped abroad by the multinationals This happens because foreign labor is cheaper than ours We are told by the three Harvard Business School authors of Industrial Renaissance Producing a Competitive Future for America that the members of the United Automobile Workers had better shape up because they are paid 80 per cent more per hour than their Japanese counterparts, who are, in addition, more productive The American man m the street reads this and says, "Just what I always suspected Amencan automobile workers are way overpaid No wonder we're having this depression " The American man in the board room reacts a bit differently "It's a healthy thing we're having this depression," he says "Now we'll be able to get those wage scales back down where they belong ". I venture to suggest that there is another way of looking at these figures (whose accuracy I will not question at the moment, though I may do so another time) One might as logically conclude that Japanese auto workers are underpaid as that our fellow citizens in Detroit are overpaid Indeed, on the basis of the history of industrial relations, I'd lay even money that a better case could be made this way than that When you stop to think of it, the idea that a working stiff anywhere is overpaid is not, on the record, over plausible...

...And how could anyone fancy it might be different with the as yet uninvented sunrise industries...

...In the famous peroration of The General Theory of Employment, Interest, and Money, Keynes wrote "Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist " The almost universal obeisance to the doctrine of free trade confirms this observation Adam Smith lives, defunct though he has been these two centuries...

...One of my points was that whatever we devise can also be devised or copied or, it is occasionally claimed, stolen elsewhere, particularly in the Orient I must confess my astonishment at some people's reluctance to accept this point, which seems to me as obvious as a sore thumb-now rendered somewhat sorer by the decision of Atari itself to start moving to Hong Kong For again and again we have lost our domestic markets to multinational competition, with the results that millions of us are out of work and that our industrial plant is operating at 70 per cent of capacity...

...one wonders Books are not meant, because they happily pirate whatever they want right now Nor is hi-tech (as we're learning to call it) meant, because our multinationals are already manufacturing "hardware" there That leaves "software," but that's easy to pirate, too And if Orientals should perversely take an interest in the data we busily beam at each other, they can pick up all they want of f a satellite, with a disk they can make cheaply...

...Fashionable economics tells us we should be delighted to buy cheap textiles from the Orient and should concentrate on selling "information" in return Information about what...

...If not, what does the incessant chatter about "productivity" mean...

...Let's assume, however, that you and I don't find labor-baiting attractive Let's assume we think it a good thing that the American standard of living is higher than the Japanese or the Taiwanese If we make these assumptions, how can we protect our standard...

...Adam Smith indeed lives-that is, has a place in history-and we will better understand our own place if we understand his The first eight chapters of his Book IV, where his thoughts on foreign trade are laid out, are not written in a vacuum They are an explicit, devastating attack on the mercantile system and especially on Thomas Mun's England's Treasure by Forraign Trade, the leading exposition of that system...

...I am reminded of Thaddeus Stevens' reaction to proposals that the North tell the South eliminating slavery was not its war aim "Ask those who made the war what is its object," Thad growled In the present case, I think we could reasonably ask those who want access to our markets to prove that their workers are fairly paid and fairly treated by our standards American unions and American companies would have the night to challenge the proof No need to make a big fuss about it, any more than a big fuss is now made about determining that certain foreign automobiles don't meet our emissions standards or that certain drugs are impermissible...

...Of course the comparisons can he made, and they will be invidious The real question is, as the lawyers say, who should have the burden of proof...