First appeared in print in The Rhinoceros Times, Greensboro, NC
Free Trade, Quotas, and Dumping
North Carolina has been hit hard with job losses due to free trade. Textile operations that once were a mainstay of our local economy have been exported to countries that pay their workers so little that American workers can't compete.
At the same time, farmers in many foreign countries, especially in Africa, can no longer raise food to sell in their own country, because food prices are so low that any food they bring to market will sell at a loss. And why are food prices so low? Because America is dumping food in foreign markets at ridiculously low prices.
So it all balances out, right?
Well, no, not actually.
For one thing, the countries that are getting the textile jobs we're losing aren't the same ones where farmers can't afford to farm because of American dumping.
If you think that's fair, then you must think that somebody who's been mugged has the right to go rob somebody innocent person to make up for what was stolen.
Besides, there's a world of difference between losing jobs to countries where the cost of labor is lower and dumping excess food in foreign markets to destroy their local agriculture.
Dumping American food, if in fact it is the cause of problems in third world countries, is not the result of the natural function of markets.
The food that is being dumped is food that is bought from American farmers by the American government, in order to help keep food prices high enough to keep American farmers in business.
Once upon a time, the excess food that was bought this way would have been destroyed. But in a world where there are famines and shortages, where children go to bed hungry, the American public would react in revulsion to the idea of food being thrown away.
So instead the food is sold below cost -- but since it can't be sold inside the U.S., where it would defeat the purpose of buying it in the first place, it can only be sold abroad.
It feels like an act of charity. After all, when we sell food below cost in some poor third world country, it allows all the citizens of that country to eat more cheaply, since low prices for food help everyone's income go farther.
And there's the constant painful tradeoff that makes arguments over quotas, tariffs, dumping -- or, in general terms, free trade vs. protectionism -- so acrimonious.
If our government did not act to keep American food prices high, then food prices would fall, and we could all eat more cheaply.
So all Americans would benefit, right? Even the people who used to be farmers but were driven out of business by low prices would be able to afford more food -- their unemployment or welfare checks would go much farther.
Likewise, when textile companies move their operations to countries where labor costs are radically lower, the cost of clothing for American consumers would fall. So former textile workers in North Carolina could afford to buy more clothes with their welfare and unemployment checks.
As long as it's not your job that's lost or exported, free trade makes everything cheaper and encourages more commerce, which encourages the creation of more jobs, and in the long run (the theory is), everybody benefits.
But the picture is a little more complicated than that.
What if a sizeable number of American farmers went out of business because food prices were so low that foreign food-growers could compete and drive domestic prices down even further? What if our food industry was entirely shipped overseas as seems to be happening to our textile industry?
We would then become partially reliant on imported foreign food -- the way we rely on imported oil.
For America not to be complete self-sufficient in food would be shameful and dangerous, geopolitically speaking.
So for our national safety, it is essential to make sure we have an agricultural sector that is profitable enough for our own farmers to produce all the food we need.
Are there other industries that we must protect for reasons of national security?
Sure -- weapons design and production. We could not afford to be dependent on foreign manufacturers for the very stuff of survival for a nation in a dangerous world.
But military industry depends on metals like steel, and much if not most of our steel industry has already been exported to other lands. Aren't we in danger there?
You could find reasons why the textile industry, too, was vital, and therefore we must find ways to subsidize North Carolina workers' salaries so we could keep textile jobs here.
But when you do that, foreign governments retaliate, raising barriers against American goods, so we have no place where we can profitably export the goods we manufacture (which then costs us jobs).
And, of course, subsidizing an industry in order to keep it safe on American shores imposes a cost on all the rest of America's consumers and taxpayers.
If we protected our textile industry, the price of clothing in America would rise for everyone, reducing the dollar's purchasing power.
This is the dance of protectionism vs. free trade.
If you have free trade, you export jobs and have to retrain workers, and we might become dependent on foreign countries to sell us vital commodities, reducing our national security. But ... you also get lower prices for all consumers.
On the other hand, if you have protectionism, you hurt people in foreign countries and you raise prices for domestic consumers, so everyone in America pays more and people in foreign countries have less access to the lucrative American market. Still, you are able to hold on to important industries and the workers in the protected industries keep their jobs.
Our official policy is to promote free trade everywhere, because free trade leads to greater prosperity everywhere, while protectionism leads to retaliation and stagnation.
But in practical terms, the damage caused by free trade -- lost jobs, mainly -- provides an opportunity to politicians to exploit the suffering of the workers who are thrown out of work.
The people who suffer from free trade are concentrated in certain industries. Their losses are intense and personal; they can be whipped up into great anger, so they actively support the politician who promises to protect them.
Whereas the constituency for free trade is "everybody," which, in political terms, translates into "almost nobody." How many of you are willing to go out and get politically active in support of candidates who promote cheaper clothing prices by getting North Carolina textile workers laid off?
No, the laid-off workers vote their anger at the ballot box; but the consumers vote for free trade at the store, where they buy the cheaper foreign products, helping kill local jobs in order to save a few cents.
Somebody always suffers, or runs the risk of suffering, some kind of loss; you literally cannot make everybody happy at once.
So what will politicians do? Prosperity is good for everybody; but if your political opponents are getting points by rousing the anger of laid-off workers, the only way for to stay in office is for incumbents to at least pretend to adopt a protectionist ideology.
That's why we end up in the hypocritical position of insisting that other countries adopt international free trade -- often at terrible cost to their workers, who lose jobs as cheap American goods flood the local market.
At the same time, we jimmy the rules so that our politicians can also get credit for saving jobs in America.
Do I have a solution? Of course not. There is no permanent solution. We simply reel back and forth between the two competing interests.
The worst situation, though, is one in which one country practices free trade -- allowing others access to their markets -- while its trading partners practice protectionism.
The Europeans are especially adept at finding ways to protect their local industries at America's expense. Their ban on genetically altered food, for instance, is a thinly disguised ploy to keep all that cheap American food out of their markets. But if we try to get them to lift that ban, then we're the bad guys who are trying to promote biological hazards.
If everybody rigidly practices free trade, everybody, in the long run, does better - though in the short run, it can be devastating.
So we continue the endless dance. Foreign countries try to get away with protecting their own industries, while demanding that we stop protecting ours; domestically, politicians try to get votes by stirring up the anger of those laid off because of free trade; but in office, if they actually promote protectionism, they'll end up harming consumers, damaging the economy, and getting thrown out of office.
The secret is to fool people in suffering industries by promising to protect them, so they'll vote for you; but once you're in office, you promote free trade to help keep the economy booming.
We as a nation, and our politicians in particular, are guilty of double standards, deceptions, and hypocrisy -- but no more so than any other country or set of politicians.
The difference is that we're America, the economic powerhouse.
If Egypt or Uruguay have a few protectionist rules in place, it hardly causes a blip in America. But if American dumps its products on foreign markets, or raise tariff barriers or set quotas, we can destroy whole industries in many countries at once, with only slight benefits to us.
We are better able to afford the costs of free trade than most countries. But that doesn't mean we can afford to be absolutely consistent. There are industries we can't afford to lose, and free trade be hanged.
Anybody who announces an unbreakable rule, one way or the other, is not living on planet Earth. In the real world, you have to keep shifting your position in order to find or restore a balance between free trade and protectionism.
So if it seems to you as if no candidate has the answer on "protecting American jobs," it doesn't mean you're confused. It means you may actually understand the issues pretty well.
Copyright © 2003 by Orson Scott Card.
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