With much discussion lately about using robots to replace more jobs, from manufacturing to flipping burgers, people face more limitations on the types of jobs available in the United States and the skill level required to work. This highlights the importance of low-to-moderate skill jobs.
Especially with rising education costs, not everybody has, can get, or should get a college degree. Skilled trades remain a steady source of solid income, but again, not everybody is a skilled tradesman. I posit that no matter how hard a nation works toward educating its people, not everyone will master a trade or achieve a college degree. Furthermore, a college degree prepares one for specific types of work; other work remains to be done. There will always be a supply of and demand for low-to-moderate skill workers. More simply, we can’t all be office workers, doctors, and lawyers.
The United States has experienced large-scale deindustrialization in the past few decades, resulting in a severely diminished manufacturing base, among other losses. Manufacturing jobs have moved to other countries, creating what’s known as the Rust Belt—and many other economically depressed places throughout the country. This is widely known and not often debated, except by those who point out that manufacturing has started to come back to the US.
Under the Trump Administration, this has accelerated. The nation still has a long way to go before it is truly revitalized from this economically depressed period, and the correction will be imperfect. The importance of policies that encourage and preserve industry must be highlighted and understood more widely.
Many point to globalist economic policies, such as those represented by NAFTA and the Trans-Pacific Partnership, as the future (as though the future trajectory must be a favorable one in all instances). Broadly, these policies facilitate the free flow of capital and labor across national boundaries—contingent upon the terms of the agreements among the participating nations. This element of negotiation is where the details reside, and it’s why Donald Trump talked about his experience in business negotiations during the 2016 election.
The existence of these agreements is subject to political discord, but at least one thing is generally accepted: Trade agreements should benefit all parties mutually. (Some argue that this is not generally accepted among some globalists whose motives are to ‘equalize’ the nation’s economies by reducing the economic strength of the US.
The mass transfer of capital and labor to other nations and resulting economic downturn has been enormously harmful to working-class families and individuals. Millennials are now feeling its effects as they enter the job(less) market to find that their overpriced college degrees did not qualify them for jobs that pay a living wage or that justify their having gone to college. Nobody is arguing that NAFTA has been good for our economy (if they are, they might be married to the person who signed it into law; and they didn’t become President).
To the generally accepted principle that trade agreements should be mutually beneficial, I would add that trade agreements should be made between parties who are allied, acting in good faith, and operating according to comparable laws and regulations. Value-added products (defined here as materials that have been shaped, molded, and/or assembled into something else) that we buy in the US are often made in other countries, from the most seemingly simple goods to the most advanced technological devices.
For example, much of our clothing comes from Indonesia, Pakistan, and China. Because these nations have more relaxed labor laws with respect to working hours and child labor, some people make an effort to select clothing brands that don’t source their clothing from what we call ‘sweatshops.’ Some people won’t buy toys made in China for their children, due to China’s track record of lead-based paints and even GHB-contaminated toys. Food from China is considered by many to be unclean, and for good reason. Even high-tech manufacturing in China involves labor practices that would not be accepted in the United States.
This is key. We consume goods, but we have many of them made in countries where labor, environmental, and social practices take place that we consider unacceptable or unlawful in the US. What we say by doing this is that we’re morally okay with such practices, even if we support domestic policies prohibiting them.
If we’re morally okay with such practices, why not do them here, and give our people the work? Why not have sweatshops, lax environmental regulations, and roll back labor protections? If the cost of doing business is too high in the US, why not abolish such laws to encourage economic growth?
I hear many libertarians arguing for global exchange of labor, but I don’t hear any of them arguing for eliminating labor protections domestically or for boycotting certain foreign-made goods based on ethical principles; it’s all about free market goodness according to them. They probably would argue to eliminate such regulations domestically, but it’s more politically convenient to argue for the status quo, whereby our dirty work is done elsewhere, behind the veil of free market capitalism.
Nobody really wants to see child labor, especially not in hazardous factories, coalmines, or sweatshops. I would join with libertarians in arguing incessantly that children should be allowed to work on their family farms and businesses, but I think something must exist to prevent children from being employed in certain occupations. Furthermore, who would argue that we should allow the burning of electronic parts in open air, as is allowed in China?
There’s certainly a case to be made, and a necessary one, for reviewing, reducing, and refining our regulations. The ones we keep should be those that prevent true negative externalities, like those caused by burning plastic and heavy metals. Unarguably, it would be disastrous to operate as China does when it comes to labor and environmental practices; it’s disastrous that they operate that way, and that we feed them work (literally buying electronics from them and shipping them back to be burned, for example).
Furthermore, the degree to which we are dependent on other nations depends in large part on how much we consume goods that we don’t produce domestically. Some goods are unavoidable imports (if we want to have them), due to climatic and geographic reasons. Others are value-added products that we could make here using raw materials. By limiting imports to necessary raw materials and crops, we limit our dependence on other nations.
As it stands, we’ve given up much of our industrial capital and with it a certain level of preparedness, as is starkly clear when one considers that some of our fighter jet parts are made in China. Never mind the cost, environmentally and otherwise, of barging all the goods over here—there are serious national security implications involved when we depend on other countries to produce advanced technology, especially military technology, for us. This is a disadvantageous position to be in, regardless of the standards other nations operate to in terms of the metrics I’ve mentioned.
In economics, a principle called ‘comparative advantage’ describes the variance among nations in the efficiency with which they produce certain goods and services. China produces clothing more efficiently than the US, therefore they have a comparative advantage in clothing manufacturing. Without looking at the reason they’re more efficient, it sounds morally weightless that they are more efficient or that they have a comparative advantage. We can’t look at these metrics alone, and we cannot treat labor like mineral resources; some countries may have more of it than others and for cheaper, but there is a human factor. A domestic corporation that purchases foreign labor because domestic labor is more expensive is not the same as importing coffee from a country with a warmer climate.
How this fits with free market capitalism, laissez-faire market principles, and liberal economic theory
Our free republic ends at our borders. No nation can have a constitution, liberal or otherwise, without defining itself as a nation, delineated by its borders. The concept of a US corporation straddling national boundaries with respect to the flow of labor and royalties is relatively new in our national history and is more attributable to elite interests than national interests (as is the legal definition of a corporation).
The singular role that our Founders placed on our government is to protect our Constitutional Republic. Undoubtedly, military forces are not the only forces that can cripple a nation; economic forces, as well as economic warfare, are potential threats as well. This trend of deindustrialization, offshoring much of our highest-value production and rendering us vulnerable to the whims of foreign governments and economies, certainly falls within the scope of our government’s role to defend our nation.
Rather than taxing domestic production and labor, we should re-align our tax code with our Constitution’s intent and tax imports. This imposes no decree on the citizen, who is freed of tax obligations. Some would argue that this imposes an indirect burden on the consumers, because the businesses will pass the cost on to consumers. This argument presumes or implies that the US economy won’t adjust and create domestic production. With tax reform and regulatory easing, not to mention American industrialism, it will. Anyway, philosophically, a tax on a foreign company upon import is not the same as a tax on a citizen. Libertarians should be advocating this model (it’s what our Founders intended), not globalism.
And tax dollars held by US corporations overseas must be repatriated—a topic for a future article on taxes and their proper role in a free republic.