Today I started a reply to a listerve that had people complaining about NAFTA. I am a long time free trade advocate. I am also, apparently heartless. People cannot seem to understand how they should be able to make $20 an hour sewing Lee Denims, yet, only want to pay $10 for them at Wal-Mart. In the long run, people can only get paid what they are contributing to the enterprise. If their costs, push up the product cost, so the company cannot make a decent return on their investment, they will shut down. With Nafta a solution to shutting down, is moving production elsewhere. The effect to the local Jeans worker is exactly the same. No Job in Jeans. But its Nafta's fault. They then point out that the "Ferners" don't make as much, and they are exploiting them etc. Perhaps at first. But as other manufacturers see the windfall of profits, they follow suit and eventually drive up the wages in the "low area". Eventually, those new jeans laborers are going to be affluent enough to travel, or buy some American goods than cannot be outsourced to wherever. Not every item is suited for production everywhere in the world.
If the low wage workers, are not of the quality of the ones they replaced, more will be required to produce the same amount of goods. This in turn increases the cost of production so after all the adjustments. things level out. Imagine if the USA did not have a Nafta between the states. We do, we just call it the interstate commerce commission. Imagine without it, Alabama decided they wanted to protect their native Orange groves, and put a huge tax on importing Florida Oranges. Maybe not much would happen. Alabama is close to the range, so maybe the southern beach coast could be converted to orange groves, and there would be enough OJ for Birmingham and Mobile and beyond. Maybe one Florida Grove would go under. Anyway. Now suppose Maine did the same thing. But to grow oranges in main, require hot houses, These hot houses drive the cost of local oranges 500% of the cost of Floridia Oranges, even with the high cost of fuel. Maybe Mainers would stop buying OJ. Maybe they would all get skurvy. Maybe they would pay the higher prices, but stop using Real Maple syrup on their pancakes. This costs a syrup maker a loss, and he decides to sell off some of his maple acreage to the loggers to pay his taxes. The loggers can no longer sell their logs to New Hampshire and beyond because of an overland transport tax. The only outlet for Main Loggers is the paper mill and book industry. The book industry is happy for the cut rate paper, since their profits have been squeezed for years too. They can finally print all the paperback romance novels wanted by the homemakers of America. But the poor ladies of Alabama cannot buy the books and put orange juice on the tables for their kids. Its titaliation or scurvy.
I am not denying the heartbreak of losing a long time job. I have been fired and laid off both, and it sucks the big egg. But if we can just suffer through this adjustment period. Allow the shakedown to work its way around North America. We should all be richer. This idea is something we have known since Elizabethan times. We need to be forward thinking. American industry is floundering largely because they are so concerned with next quarters reports to the market. The Market punishes companies for taking a long term view. We have got to find a way to create a way to pay for our future social security retiree explosion when the baby boomers retire. New industries should evolve and people may have to move or come up with a way to make their living where they are. Our immigrant ancestors, left the old country with very little. They cleared land, and created a living for themselves, which was not rich at first, but over time created value and wealth. Our current state of affluence has a lot to do with the rest of the world's production capacity being destroyed. Prior to WW2, we were not a rich and prosperous nation. We made do. I cannot think of a current analogy - maybe The Ukraine. Lots of bread, but not the juggernaut most Americans feel is our birth-rite today.
Its very possible the fabulous 50s which created the suburbs, the 2nd car, Color TV was just an anomaly in history. And we are adjusting back to our long term equilibrium. Japan had a similar expansion and retraction. In the long run, the economy does not allow windfalls to perpetuate. Of course, in the long run we are all dead.
In the long run there are no trees on Easter Island. There used to be trees. Thats is how they rolled the big Moai from the quarries to their spots on the shore watching over the sea. Did the natives understand once they used up all the trees, there would be no more? Some may have. But in the short term urgency of needing the trees to roll the heads to the ocean, and the seeming never ending supply of the trees, no one bothered conserving, or recycling the things. The last tree was probably just a scrubby sapling no one thought twice about, cutting down to make a fishing pole. Whoops.
-a Mind concious of what is right.
This is the motto on the Phillips coat of arms.
PLEASE STAND BY...
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