Growing American Protectionism: A Small Tail Wags a Large Dog

Tom Peters

What image comes to mind when considering the new global economy in general, and our continuing trade crisis with Japan in particular? Most likely that of a forlorn, 53-year-old male. A big-company man, a union man, as his father and grandfather were before him. He's put in hard time—well over 20 years on the grimy production line at General Motors, for example. And now he's out of a job, pounding the pavement. He is too old for extensive retraining and too old to start afresh. He'd be lucky, we lament, to sign on with Domino's Pizza as an over-age, minimum-wage driver.

With this man (and his family) in mind, we've lashed out at the Japanese by constructing formal barriers, such as quotas, to partially shield 35 percent of our products from their ever-longer tentacles; that's a dramatic increase from just 8 percent in 1975. And while the rest of the world is busy opening its markets, we've passed, by a huge margin, our most restrictionist trade legislation in six decades—and it is, make no mistake, aimed squarely at the Japanese.

That worker's plight is tragic. He and others like him deserve more than our sympathy. They deserve our hard-earned tax dollars, to provide a lifeline and a bridge to some sort of honorable, abbreviated second career. But should this man carry the disproportionate weight that he does in economic policy making?

To answer that question, I performed a short set of calculations, which yielded surprising results. Our private sector work force consists of a little more than 100 million people. Of that number, about 20 percent, or 20 million, work in giant companies with more than 5,000 people on the payroll (the companies that ordinarily come to mind when we think of trade issues—Chrysler, Caterpillar, etc.)

Of the 20 million big-company workers, about one quarter—5 million—are in manufacturing. And of that 5 million in manufacturing, roughly one quarter, or 1.25 million, work inside a factory. (Three-quarters of a manufacturer's payroll consists of service people—accountants, marketers, scientists, and distribution center workers.) Of this remaining 1.25 million, about 55 percent are in a union; let's say 700,000. Seventy percent, or 500,000, are men. Finally, about 20 percent—call it 100,000—are over 50.

Put another way, approximately one-tenth of 1 percent of our private sector workers are over 50, union-card-carrying, factory-working men, toiling for a big outfit. Of course, to top if off, only a small fraction of these high-seniority men are currently on layoff status, especially with our factories running at a very high 84 percent of capacity.

You can fault my logic. Our problems are real—and severe. I've said as much time and again. Moreover, it is certainly true that when a GM or IBM factory bolts its doors, other jobs, in small subcontractors and in local laundromats and banks, are lost. (Still, our unparalleled record of job creation, with wages not nearly so low as doomsayers would have it, offsets most, if not all, of this—but that's another controversial and complex story.)

However, those associated jobs, important as they may be, and many others that are genuinely at risk are not the point. We make policy—on drugs, farming, law enforcement, or economics—based primarily on simple, compelling images. Just look at the trouble George Bush is giving Michael Dukakis over law and order, which polls indicate is the public's number one concern right now. Most of Dukakis' grief stems from the image of one man, Willie Horton, the Massachusetts first-degree murderer who received an ill-considered furlough from prison.

I reiterate that the dominant image in trade policy (i.e., the sort of thing that Dan Rather features on the CBS Evening News) is that 53-year-old male family member, etc., etc. Though his plight is worthy of compassion and action, our economic policy should not be driven by that man and his roughly 99,999 peers. Right now, it is.

The resulting policy is downright dangerous. For example, our restrictionist actions pilfer at least $60 billion a year (the inflated price of restricted goods) from the consumer's pocket, and that's before we absorb the effects of the new trade bill. Much more important, this policy, which still is gathering way, buffers us from competition and changing circumstances; it slows, rather than speeds, the wrenching adjustment of our largest firms to the revised world economy.

Among other remedies, I suggest that true friends of competition offer up a new and more accurate image of the beleaguered but exciting American economy, which is doing surprisingly well on many scores, such as high-wage job formation and entrepreneurial vigor. Consider a 26-year-old woman, starting work for a Big Eight accounting firm. (Over 50 percent of entry-level Big Eight accountants are now women.) Not only does she correctly represent the emergent work force, but her choice need not offend even big-manufacturing's apologists. The odds are that she's part of a team designing a just-in-time inventory management system for a giant manufacturer, and thus is working with the tool that most increases the likelihood of keeping big-firm manufacturing jobs at home.

With her in mind, a bundle of up-to-date skills in her head and modern tools at her fingertips, we will welcome rather than duck competition. We will treat the economic transition as the opportunity it can be rather than the threat it now appears to be. And we will reject out of hand the neo-isolationist, restrictionist palaver that is spewing forth from Washington these days.

(c) 1988 TPG Communications.

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