The other day, my car wouldn’t start…the battery lacked the juice to turn it over. So when I got home from work, I talked to the garage next door, whose owner is also my landlord. He sells used cars, and I asked him if business had picked up at all.
He said no, and mentioned that he thought we were in a “new economy.” He said he thought the problem was that “nothing is made here” anymore. For this, he blamed the government, and I said I thought it was more likely corporations that were at fault. Then he said something that sort of surprised me. Remember, this is a small businessman talking. He advocated heavy taxes on imported manufactured goods. In other words, the problem with the government for him wasn’t taxes per se, it was that taxes that could protect American jobs were too low. What he didn’t say was that his taxes were too high.
Now, I happen to live in one of the many states where people like to complain about that they have the most burdensome taxes of anywhere. This guy has been in business here–running a used car dealership (which leans heavily toward Cadillac, his favorite), garage, and full-service gas station–for just about forever; I think he’s in his 80s now (but he manages to be at work by 6:00 or so every day).
But his complaint wasn’t about his taxes–it was about not having a fair chance to compete.
I’ve always tended to think about the “new economy” (which I also call the “world” economy) as a good thing. It gives us inexpensive phones produced in China (full disclosure: mine comes from Korea), and makes China dependent on the US for a market for its products. We trade with lots of other partners, too. In this way, the “new economy” creates interdependencies that that militate against international armed conflict. You can’t sell MP3 players to the people you’re attacking, etc.
But at the same time, it has perverse effects. I recently listened to a segment of This American Life that described a Foxconn factory in China (point of origin of iPhones and many other products–something like 30% of American consumer electronics products are produced in a single factory complex). The program described 16-hour work days, poor safety controls, 14-and-under workers and buildings surrounded with netting to foil suicides. Some things it described were merely odd or awsome, like cafeterias that can feed 10,000 workers at a time. Some were horrific–a man who had been seriously damaged by the equipment he worked on, others injured by chemicals that are not tolerated in the US. Most were just sad–the workers had seldom if ever seen any of the devices they manufacture powered on, and forget about ever owning them. Minimum wages in these factories are often minimal wages.
The other perverse effect is what my landlord talked about; nothing is made here any more. He also pointed out that his garage gets parts made in China that don’t cost any less than those (formerly) made in the USA. So that raises another question (which I won’t go into here). If the products were produced under US labor standards–which most of us would probably think was a good thing–would it be cost-effective to import them? And, if not, could they be produced in the US and in any way made affordable?
Maybe. The year I graduated high school, 1976, I worked in an electronics factory that made video monitors for guard stations and such. There were about 40 middle-aged women on my shift, each stuffing selected components into TV circuit boards. Literally, an assembly line. Then the boards came to my station where I wave-soldered them (using what was, honestly, not the safest chunk of equipment). I learned the words to “The Man Who Shot Liberty Valance” from the radio that played all day long. I got paid minimum wage. For me, it was great, since I was still living at home. For many of the others working there, it was at least adequate. But a few years later, that factory closed.
I assume that it closed not because demand for the monitors went down, or because their price went down, but because it became cheaper to manufacture them somewhere else (though likely not China at that time). So who benefitted?
My guess is the shareholders of the company for which we produced the monitors–but that came at the dual expenses of putting people in the US out of work and putting people somewhere else at risk. We also (ultimately) got interdependent world markets this way.
No blessing is unmixed; but what can we do to have the advantages of the world economy without its nasty side effects?
By the way, my landlord warrantied the battery and my car was going in no time. It’s good to have small businessfolk around. They’re your neighbors–support them!