The New York Times came out recently with an essay supporting the role of government to pay people money if they get displaced by offshoring. The idea is catching on. This sounds compassionate but it’s like the guy spreading the plague offering you a band aid for your bleeding boils. The government’s trade policy has created an employment/wage nightmare and no one should suggest that they be let off the hook by extending your unemployment insurance and food stamps. (- not to mention that it’s a budgetary lose lose)
The problem is that Chinese exports are massively subsidized. The knowledge that (virtually) free labor exists in China infects the mindset of all executives and US workers. We have to equally subsidize our exports to them. If they block our exports then, , we have to shut it down – unless we enjoy sinking into a permanent downward wage spiral. Does anyone still think that laid off workers will someday move on to other high paying jobs after some modest transition period?
The political class has been sold the idea that China is marvelous because multinationals can make cheap stuff for US consumers over there. They thought the whole thing would be a win win – lots of multinational campaign contributions and happy voters who can get really cheap flat screens. Clearly part two is over (as Donald Trump has discovered) and a part of the multinational dream is fading. “We” thought that all those Chinese plants would allow us to sell “our” stuff in China, to the 300 million Chinese who make more than $10/hour. How’s that turning out?
I wrote in July 2014 that Apple must know that they would never be allowed to sell their stuff in China. There are many companies who have been shut down before them (Google, AMD, IBM, Microsoft, Cisco) . Apple was living on borrowed time. Here’s how the NY Times put it:
It’s time to abandon certain words that have become pervasive for no good reason:
- Folks – all people/voters/ISIS members/NPR listeners are not “folks”. Folks are ”
- On the ground – allow me to assume that all international reporters and army men are on the ground. If they happen to be floating in the air then I expect you to mention it.
- Free Trade .. all evidence from the past 20 years has exposed that most trade is anything but free. Trade deals are thousands of pages long (even NAFTA) . Goods may travel on the open seas freely but there are surcharges, subsidies, and quotas everywhere and they are very unevenly distributed. If you can show me a trade deal where the US runs a (larger) surplus after the deal then we can use this ridiculous term – otherwise, its use must be restricted to the pages of economics text books.