CNN/Money has a good backgrounder on the rise of economic protectionist sentiments in the United States and why they’re bad news for the overall economy. Protectionism is bad policy at any time, in the middle of an economic downturn it’s suicide (see the Smoot-Hawley Tariffs for an example of this).
Protectionism is based on the lie that the government can dictate where jobs go. The assumption is that if the government tells businesses that they can’t export jobs, that those jobs will stay in the United States and they won’t be lost.
Except the fact is that for that to work, someone else has to lose their job. If a company must reduce costs, they can’t keep the same number of jobs – and in the end, those jobs that would have been imported will simply go away.
That produces even more collateral economic damage in its wake – not only have those jobs disppeared, but those who depend on the products or services created by those jobs are now out of a job as well. After protectionism is enacted, you end up losing more jobs than you would have otherwise.
That is exactly what happened with steel tariffs:
What’s more, the Bush administration’s recent experiment in protectionism, a steel tariff imposed in March 2002, has had only mixed results at best. It may have helped steel producers in Pennsylvania and West Virginia — states with critical electoral votes for Bush’s re-election effort — but U.S. steel users say they have suffered from it, resulting in thousands of additional job cuts.
“The government should have learned its lesson from steel tariffs — they were a big disaster,” said Matthew Ellis, an economist at Wachovia Securities. “I don’t think these protectionist measures will be passed.”
Unfortunately, the Democrats have abandoned the moderate and sensible trade policies of Bill Clinton. With Howard Dean and others wanting to gut NAFTA, pull out of the WTO, and take our trade policy back to the worst mistakes of the Great Depression. For all the cries against US “unilateralism” in foreign policy, the Democrats seem anxious to enact a go-it-alone trade policy that will destroy the US economy and cost millions of jobs. With the economy in the middle of a recovery, such a policy would be devastating – which is why those who would enact such a disastrous plan should not be elected to office.
If a company must reduce costs, they can’t keep the same number of jobs – and in the end, those jobs that would have been imported will simply go away.
I have a tiny problem with the above. Company don’t just reduce costs because they must – they reduce them because they can.
Don’t get me wrong. I am for free trade, but I think we should let outsourcing happen in controlled fashion…
It’s a little of both. If you’re running a business that has to cut costs because you can’t make payroll for next month, it isn’t a question of wanting to lose workers, it’s a matter of having to. You don’t have the cash on hand to pay for those people.
It’s always a pain in the ass to fire someone. You have a lot of legal liability in doing so, and when you want to expand your business later on you have to take on additional expenses to hire again. However, in a downturn companies have to shed excess bulk – and after a decade of “irrational exuberance” and dot com mania, a lot of companies found that they couldn’t afford the extravangances they’d added on during those times.
The folly of “controlling” outsourcing is that you’d have to tell those companies that they can’t move jobs, and they can’t fire people. So a lot of businesses would simply go under because they can’t pay the bills.
I don’t like outsourcing, I think it’s a boneheaded business move over the long term, but the ways suggested to prevent it would only make the situation worse.
The folly of “controlling” outsourcing is that you’d have to tell those companies that they can’t move jobs, and they can’t fire people.
Some legislature can be introduced which would suspend/decrease certain corporate tax benefits to corporations which outsource, etc… Thanks to the internet, we are bleeding jobs at a much (much, much…) faster rate then we are creating them. I think we need to slow it down a bit.
A pain in the ass to fire someone? Back when unions were more prominent and terminated workers could lean on grievance committees to look over the situation that led to the termination, it was more difficult to fire people. Nowadays, I’ve never known a company of any size at all that broke a sweat in the process. I’ve known dozens of companies that thrived on the high turnover rates that have been made possible by the unchecked powers of non-union enterprise.
As the American worker’s role on this Earth is reduced to profit vessel a little more each day, the exact opposite scenario of the fantasy-world premise you suggest will grow more entrenched. The few American companies that continue to employ Americans in the post-globalization economy will have so much political leverage because of their desperately-needed presence within American borders that the already weak laws related to worker termination can be expected to be made even weaker.
Unions are so 1917.
Back on September 10, 2001, alot of Americans thought the military was “so 1985”. They were fools just as you are for believing that if unions went away today, the conditions that inspired them “back in 1917” wouldn’t return in a heartbeat. In the meantime, keep enjoying your vacations, 40-hour workweek, mandatory overtime and paid holidays (including Labor Day) that give you enough time to sit in front of your computer multiple times a day and bemoan how unions are relics of the past. These benefits have been accomplished by the sacrifices and iron-balled fortitude of better men than yourself, and will only be around for future generations if better men and women than you exist somewhere in the American work force and have enough backbone to hold onto what their ancestors earned for them.
Back on September 10, 2001, alot of Americans thought the military was “so 1985”.
LOL! Why not be more specific when referring to “alot of Americans”? Which party would these Americans belong to?
These benefits have been accomplished by the sacrifices and iron-balled fortitude of better men than yourself
Straw man. I haven’t claimed that those rights were easily earned. Quote me!
The point is that today – you don’t have to be in a union to enjoy those benefits.
On the contrary, you do have to be in a union if you want to keep those benefits. For the last couple decades, the declining presence of organized labor in the American economy has paralleled the increase of workers without health care coverage or benefits. The only reason any of these benefits still exist for most workers is the recognition that if suppressed far enough, workers will muster up enough balls to unionize. With each year that passes and each year that sees union membership decline, the concept of organization and collective sacrifice for the common good is wasted on today’s workers…and they’ll continue to be beaten down because of it.
As for the Democrats being the party of military weakness in the pre-September 11 era, there’s some definite truth to that, even though the Republicans weren’t exactly doing their job in defending their Pentagon constituency back then either. Nonetheless, the Democrats loose grip on history and vulnerability leading up to 9-11 doesn’t justify your loose grip on history and vulnerability regarding labor unions.
…even though the Republicans weren’t exactly doing their job in defending their Pentagon constituency back then either. >
Give me a break! Liberals are still against profiling. Against common sense.
Profiling doesn’t have much to do with what I was referring to. Republicans were so obsessed with the whereabout of Clinton’s penis in the late 90s that representing their military constituency during a perceived peace time was a low priority. Now they want to retroactively assign blame to the President who was in charge in previous years.
Now they want to retroactively assign blame to the President who was in charge in previous years.
One name: Mansoor Ijaz.
Yes, unions give us sunshine, puppies, and beer too.
The truth is that unions are responsible for very few of the things they are given credit for. The Fair Labor Standards Act was passed long before unions were politically powerful. In fact, if you want to give real credit for the 40 hour workweek you’d have to give it to Herbert Hoover (!) who created the first standard 40 hour workweek for federal employees in 1932 (and had created a 48 hour workweek for steel workers in 1922 when he was Commerce Secretary under Warren G. Harding).
The fact is, unions are losing their power as workers find that they don’t need to pay organized crime and the Democratic Party to represent their interests. There is still a place for collective bargaining, but workers are rapidly realizing that the corrupt and ineffective unions aren’t the best way of doing it.
Jay, alot of Enron and WorldCom employees may disagree, after they were robbed blind by the cancer they helped create when they gave the non-union culture of destruction and exploitation their silent blessing by failing to organize and putting blind faith in the bossman to protect their backside. Then again, many probably would still agree with you, as stupidity has proven itself an incurable plague often denied even by those covered from head to toe by stupidity’s weeping red cold sores.
All your spin about warm-hearted Republican Presidents of the 1920s engineering workplace benefits and regulations before unions ever dreamed of getting around to it fails to address the present-day conundrum. Without unions, there is no lobbying force for the interests of America’s workers. With no active lobbying force on one side of the class spectrum but a vehemently active and empowered lobbying force looking down on the factory floor, suddenly the sorts of laws that allow meatpacking barons to “regulate their own health and safety standards” and for workers who own stock in a company to be unable to sue their employer after being intentionally bilked (a la Enron) start to become increasingly commonplace.
Suddenly, the mean old mob guys who may or may not have thrown Jimmy Hoffa into the cement 30 years ago don’t seem quite so ominous…or at least they shouldn’t. If the market economy has a prayer of surviving human nature, an organization of the proletariat in some capacity is a must. Unions have proven the only successful way of achieving that, as trusting others to protect you like so many present non-union workers do, has produced disastrous results. Yes, unions are prone to corruption and are an imperfect institution. But so are the corporate lizards you worship. Better for an even-numbered tug-of-war of two opposing “evils” to occur than for one of these evils to have 100 pulling their end of the rope while the other side has 5, such as the destructive present-day equation.