The logic of this all sounds good and rings with some truth in the higher echelons of intellectual pursuit. It’s too bad, however, that a substantial number of our legislators and economists never worked in a factory nor ran their own production lines. If they had, they would not be just aware, but acutely aware, of the difference between free trade and fair trade. Those words are by no means the same.
In the 1980’s and 90’s my family owned a furniture factory that manufactured furniture sold throughout the US. We employed about 60 skilled workers in a competitive environment. It was in those years that NAFTA came into being and that free trade with China became the rage.
We were told that globalization was going to solve the consumption problems of the world as all products would become cheaper for the consumer. Less expensive products were what were needed everywhere, and all were beneficial. Anything that might prevent that, such as tariffs or taxes, was somehow bad or evil.
What the US economists, intellectuals, bureaucrats, and legislators failed to look at was not whether the trade was ‘free’ but at whether it was ‘fair.’ Perhaps the key reason for this is that very few of them had ever had any experience working in manufacturing. There are myriads of rules and regulations that manufacturers in the US must deal with – OSHA, disability facilities, equal employment rights, minimum wage laws, sanitation rules, QMS Certifications, occupational health and safety rules, environmental compliances, insurance costs, workmen’s compensation, and unemployment compensation, just to name a few – that many foreign countries can just ignore. Trade with the US may be ‘free’ but certainly not ‘fair’ for our US manufacturers, who must follow these hundreds of regulations.
One of the executives from Bassett Furniture went to China and by sneaking around was able to find the location of one of the factories that was copying a Bassett line of furniture. He went into the finishing room, which is normally very difficult and expensive to keep clean. He was shocked when he saw how dirty and mucky the room was in China. The workers were covered in paint sprays. He asked the manager what they did for the workers? His answer was that they work there for a year or so, and then get very sick, and so they hire new ones. And we call this ‘fair’ trade?
Because of such an unfair playing field, it is the US worker and owners who suffer extreme hardships and become victims of the results of such ‘free’ trade. US workers suffer from lost jobs, lost homes, disrupted schools and friends, lost savings and disrupted lives. Between 2001 and 2012 over 5 million factory jobs were lost and 63,000 American factories closed. (We were one of those factories who did.) While at the same time China got over 14 million new jobs. What were we thinking?
American ingenuity had built up the knowhow and skills, but China and others were able to copy what had been invented by us, at greatly reduced costs. I see absolutely no fairness in any of this. Enabling a consumer to buy a sofa or a washing machine for a little less money in no way justifies these incredible hardships, nor can it properly be called free trade. To properly be ‘free’, it must be ‘fair.’
I think a great deal of this thinking is done by folks who are educated beyond their intelligence. If they could make the playing field truly ‘fair’, as Trump is trying to do, then we just might have a different story.
Don’t knock our tariffs until you know the complete story.