Tens of thousands of jobs are leaving the
country, and many of these jobs were in Michigan. CNN host Lou
Dobbs brought attention to this trend. On his business show last
Friday, he had Sen. Byron Dorgan (D-N.D.) on his show to announce
to the American people which companies have taken their jobs out of
the country. Levi Strauss has taken 15,000 jobs out of the country,
Motorola has eliminated 7,000 American jobs and moved them to
Mexico and 5,300 Fruit of the Loom jobs have left the country. When
Gov. Jennifer Granholm was on the show, she mentioned a Michigan
company named Electrolux that moved 2,700 jobs out of the country.
Dobbs has been building a list of companies that have taken jobs
out of the United States, and the list includes pretty much every
U.S. company I can think of.
Granholm used her State of the State address to promote trade
restrictions as well. She said, “As your elected leader, I
would not be doing my job if I did not force the question upon
Washington and upon you, the Legislature: How can a state so
reliant on manufacturing compete with countries paying $1.57 an
hour, usually without health care or environmental or labor
“In this election season, all of us must specifically call
on all those who seek the presidency on both sides to stand up for
robust trade, lots of it, but fair trade, so that our outstanding
companies and hardworking people will have good jobs in the years
ahead.” Granholm, Dobbs and Dorgan have done a good job
explaining the downsides of free trade. A number of politicians and
political commentators have joined the strengthening movement
against trade as economic and job growth remains less than robust.
But these individuals ignore the primary reasons why free trade is
a far more compassionate policy path than protectionism, or, what
politicians have now named “fair” trade.
The jobs that leave the United States don’t disappear.
When Levi Strauss moves 15,000 jobs out of the United States,
thousands of Mexicans get jobs that can help lift them out of the
abject poverty that is all too common in developing countries. As
Economics Prof. Alan Deardorff, the University’s leading
expert on international trade, told me, developing countries are
less able to cope with unemployment than the United States. When a
worker at Levi’s loses his job in Georgia, the federal
government can provide him with unemployment insurance, education
programs and can help him find a new job. I realize this is not of
much solace to a 55-year-old former textile or manufacturing worker
with only a high school diploma, but he’s still in a much
better situation than the jobless worker in a developing country
who lives in a shack and can’t feed his kids.
According to a paper by the economist Robert Feenstra, foreign
countries lose billions of dollars a year because of U.S.
protectionism. The New York Times has run a series of editorials
chronicling the United States’s efforts to convince countries
like Vietnam and the Philippines to open their markets and trade
with us, while we’ve poured enough into farm subsidies to
keep the foreign farmers in poverty.
But these international arguments do not promote
Americans’ individual well-being over foreign workers’.
So, while the internationalists should promote free trade for these
reasons, not many U.S. politicians will use this as a justification
for free trade. Granholm says it’s her responsibility to
protect Michigan jobs. The problem is, as Deardorff pointed out, is
that the benefits of trade are more difficult to detect than the
negatives. Former Treasury secretary Lawrence Summers has said,
“No one ever says on Christmas morning: Without trade with
China, I’d only be able to buy half as many toys for my
kid.” In fact, according to Feenstra, U.S. domestic prices
would increase if there were more protectionism, and domestic
companies would have more market power inside the country, putting
important markets into the hands of a very small number of
companies. For example, the higher price of steel that resulted
from the steel tariffs President Bush enacted at the beginning of
his presidency hurt a number of other steel-consuming industries,
such as the auto industry, causing them to lay off workers.
The United States and Australia just completed a free-trade
agreement that eliminates tariffs on almost all manufacturing goods
the countries trade. The United States, however, would not agree to
stop protecting its agricultural producers from Australian sugar,
beef and dairy products. It might have something to do with the
sugar lobby’s donations of over $20 million to both political
parties since 1990.
But protectionist agricultural policy does more than help a few
American farmers (more likely, agribusinesses) and keep foreign
farmers impoverished. It also maintains artificially high domestic
food prices. So parents struggling to make ends meet, many of whom
live in Michigan, will have a harder time buying items like cheese
and beef for their families. Where’s Granholm’s sense
of duty to help them?