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April 21, 2007

Our Trade Deals Harm America

-- by Dave Johnson

The Establishment Rethinks Globalization.

Short version: Our trade deals are transferring "wealth-generating productive capacity" to other countries, which weakens America.

It's not just that we no longer make stuff, it's that we're transferring the capacity to make stuff, along with the higher-paying jobs that tend to be located where the stuff is made. Shoes are one thing, and you can start making shoes again in a relatively short time if you have to. But LCD screens and computer chips are another thing entirely. The technology advances rapidly. When you transfer that it's gone and very hard to get back.

"The question is where do you put your technology and knowledge and investment? These other countries understand that. They have understood the following divergence: What countries want and what companies want are different."
And,
Americans can choose to blame China or disloyal multinationals, but the problem is grounded in US politics. The solution can be found only in Washington. China and other developing nations are pursuing national self-interest and doing what the system allows. In a way, so are the US multinationals. "I want to stress it's a system problem," Gomory says. "The directors are doing the job they're sworn to do. It's a system that says the companies have to have a sole focus on maximizing profit."
And the best part:

He [Gomory] wants to re-create an understanding of the corporation's obligations to society, the social perspective that flourished for a time in the last century but is now nearly extinct. The old idea was that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product. "That attitude was the attitude I grew up on in IBM," Gomory explains. "That's the way we thought--good for the country, good for the people, good for the shareholders--and I hope we will get back to it.... We should measure corporations by their impact on all their constituencies.

"So in my utopian dream, we decide what we want from the corporations and that's how they make a profit--by doing those things. Failing that, I would settle for the general realization of this divergence and let people argue it out."

Posted by Dave Johnson at April 21, 2007 8:49 AM

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Comments

That's because economists are idiots cloistered away from the real world. So they believe that technology is fungible, easy to create and easy to recreate.

Even as they teach about a learning curve and how that applies to costs, they forget about the lesson of the learning curve and how that applies to knowledge.

Posted by: J Pierpont Flathead [TypeKey Profile Page] at April 21, 2007 12:12 PM

This is an incredibly dangerous situation. As we give up the ability to manufacture, we are giving up the ability to be self-sufficient if we once again find ourselves in a major war, which is bound to happen sooner or later. We won't even have the capacity to make the necessary advanced weapons if we're importing the stuff we put into them.

Posted by: MJ [TypeKey Profile Page] at April 21, 2007 2:09 PM

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