BY KEN ROBERTSON
As I asked you to do last week, before you read this and my next few columns, please Google “Chesterton’s Fence.” The premise is that one should not criticize or agree to change something until you understand how it came to be in the first place. The intent of my columns is to dig a little deeper into “how we got here” so we can do a better job in the future.
If you are like me and most Americans, you have a bit of a love-hate relationship with low-cost Chinese manufacturing. We love the low prices, but we also know the pendulum has swung too far. Sometimes it seems like almost every item in Walmart and Target, much of our furniture, and almost all of our textiles come from China. When the coronavirus hit, we learned that unfortunately most of our medical protective apparel and medicines also were sourced in China, and that is a big problem.
Let’s take a walk down memory lane. In the 1960s and 70s, we did not trade with China. We did trade with Japan. I remember the first Honda cars. They were a joke. I remember MAD magazine making fun of getting gifts made in Japan because so much of what we imported from Japan was cheap crap. The Japanese people are brilliant and industrious. They adopted a quality philosophy promoted by the American engineer and statistician Edward Deming. We Americans had ignored Deming, but the Japanese embraced him. By the 1980s Japanese manufacturing was widely recognized as superior to American, and they were the leaders in many industrial sectors, especially in automobiles. Before long, all electronics were also made in Japan, and they were good. We were late to the game, but American manufacturing began to focus on quality too.
American policymakers went to work. The Japanese were decimating our textile industry. The U.S. labor rates made “cut and sew” textile operations obsolete. In 1983, under President Reagan and a Congress controlled by the Democrats, the Caribbean Basin Initiative (CBI) was launched with the intent to keep American fiber and fabric manufacturing in the U.S., but to outsource the cut-and-sew operations to our low-wage island neighbors. That combination would enable us to compete with the Japanese. I recall Rep. Cass Ballenger, our congressman, explaining how this was the new reality in order to remain competitive. The CBI did not include Mexico, and we continued to close factories and lose manufacturing jobs
Illegal immigration from Mexico is nothing new. In 1994 President Clinton, with Republicans controlling Congress, signed the North American Free Trade Agreement (NAFTA) to help all of us work together to become more competitive globally. It was a good idea. Mexico would become more prosperous and its citizens would have good job opportunities at home. The U.S. would make the parts, and Mexico would assemble them with low-cost labor into the final product. Unfortunately, Ross Perot had it right: NAFTA eventually became a gigantic sucking sound of American jobs going to Mexico.
My father was a civil engineer and a smart man. We had been stationed in the Japan while he was in the Air Force, and he had a lot of respect for the Japanese work ethic. One night we were watching the 6:30 news, and there was a story about Japanese youth adopting American culture. They were wearing blue jeans and listening to American Rock and Roll. He said, “they have had it now.” Japan is a small nation. And, sure enough, its limited labor pool started demanding higher wages, and eventually Japan lost its advantage of cheap labor.
Before long, everything in Kmart, Walmart, and many other retailers was “Made in Mexico.” Unfortunately for the United States, the devil was in the details of NAFTA. American companies not only outsourced the product assembly to Mexico, but they also outsourced the parts manufacturing. We had entered the era of the rapidly rising stock market, along with big CEO bonuses. Companies focused on maximizing profits so the stock prices would continue to rise for shareholders even if it meant reducing their domestic workforces.
President Clinton let China join the World Trade Organization in 2001. This was at least partly motivated by the belief that we could avoid China becoming a military threat if they were our trading partners. A prosperous and friendly China would be good for world peace. I never will forget they said we should not worry because we would stop making textiles and furniture but would make computers and high-tech electronics instead. China would make all the other things we don’t want to make. The devil was in the details once again.
When Mexico started losing jobs to cheap Chinese labor, that was the beginning of a disaster for the U.S. as well. Unlike Japan, China has billions of workers. Yes, Chinese wages went up, but by pennies per hour, not dollars per hour. The Mexican economy suffered, and the stream of economic refugees did what they always do, head north.
China has stayed on top. They have us where they want us. We depend on them for everything from drugs to masks. Luckily, Americans have had a sneak peak of what it means when we assume we don’t need manufacturing on our own shores. We have lost too much manufacturing. There needs to be a better balance.
Before we blame the current Republican president, the current Democrat governor, or anyone else, let’s think about how we got here. The road to hell was paved with good intentions. The devil was in the details. We must have trade negotiators who are not global idealists attempting to help other nations at our expense; that did NOT work. We must look after our own interests first.
We know we need a different path forward. Without a proven commercial vaccine for COVID-19 (one is not expected before the end of the year), the virus will be back in the fall. When that happens, who will make our protective equipment and our medicine? Is our new plan to stockpile higher quantities of Chinese items while Americans remain unemployed? Is our plan to hope Chinese drug companies will quickly and safely make the vaccine we invent? Will we rely upon our fellow countrymen? Or will we rely upon Communist China just so we can save a buck? The decision is ours, and we should make that decision now.
We can repeat the same mistakes or we can change.
Ken Robertson is an Iredell County commissioner.