Globalization creates jobs for China and not for U.S.

BY ROY NERSESIAN

COMMENTARY

The Administration supports globalization and has warned Americans that globalization means lower pay. They are dead wrong. Globalization means no pay!

America won World War II and embarked on a program unheard of in the annals of history: rebuilding the infrastructure of a defeated enemy. Part of this was the realization that if Europe was not rebuilt, it would most likely fall under Soviet domination. Money poured into Europe allowed Europe to regain its moorings, which, as an aside, are endangered once again of being lost. Japan also received American largesse, but with a difference. Unlike Europe that had a large, developed domestic market, Japan had none. Its prosperity was built on exports. The Japanese, once they regained their moorings, organized themselves as Japan, Inc., learned how to make quality goods from American quality specialists, and selected their favored export industries. The first was steel then more sophisticated products made from steel such as ships and automobiles. The Japanese shipbuilders wiped out European and American shipyards and shrunk the market for domestic car producers. Their second favored industry was consumer electronics. Their superior quality and greater manufacturing prowess wiped out U.S. radio and television manufacturers and all jobs associated therewith. Although the transistor was invented in America, the Japanese were the first to adopt it to consumer electronics and created a whole new market for themselves. In time, the workforce was fully employed, which enabled worker's wages to rise to the point where they could buy what they were making bringing into existence a strong domestic economy.

This is known as bootstrapping. It was great for the Japanese, but at a cost of American jobs in radio, TV, and automobile manufacturing. No one really complained as jobs continued to drift overseas with the bootstrapping of Korea (almost a carbon copy of the Japanese experience) and Singapore and Taiwan. While the latter two involved loss of U.S. jobs in computer components, bootstrapping from a global perspective created many more jobs than were lost. Certainly jobs created to serve non-American markets cannot be criticized. And I'm not suggesting that we should not have supported bootstrapping as an economically strong Japan and the Southeast Asian Industrial Tigers with rising standards of living were bulwarks in the spread of communism.

China is something entirely different. We survived whatever jobs were lost in bootstrapping Japan, but we may not survive bootstrapping China. Here's why — no one is surviving China's onslaught. Family-owned dress making companies in Jamaica have been closed. I don't think Jamaican women make much in hourly wages, but they could not withstand the competition from China. China is responsible for the deindustrialization of third world nations, not just the industrialized West.

Here are the sad economics — you can hire a hard working Chinese laborer for a week for the hourly wage in the United States. Bootstrapping has not occurred in China in the sense of developing a domestic market other than for skilled workers, managers and technicians. The bulk of China's labor force works for something less than peanuts. But the globalists say that China's wages will rise as they did in Japan and the Industrial Tigers and jobs will migrate away from China. But to where — neighboring India, Vietnam, and maybe Africa?

China is far from full employment. From the perspective of the Chinese government, their major problem is unemployment — 150 million more Chinese need to be employed. China's solution is to keep labor rates low and pursue the export market option. I was at a social function talking to an individual who has started a perfume company. Somehow we got on the matter of perfume bottles and he admitted, sheepishly, that he was "forced" to import the bottles from China because he could get them for pennies on the dollar cost of U.S. bottles. My bet is that the bottles sold for less than the value of the glass. My neighbor, a maker of U.S. fasteners for the automobile companies, had to compete against Chinese made fasteners that cost less than his price for steel. He could presumably have made money by buying a finished product, melting it and selling it for its raw material content. Needless to say his factory has been liquidated along with the jobs of 150 employees.

The Chinese communist mandarins not only take advantage of the poorest paid workers in the world, they also keep their currency exchange rate artificially low to promote exports and subsidize exports by profits made elsewhere. The Chinese are not out to dominate a market, but simply take it over. It is economic warfare pure and simple.

Domestic manufacturing in Europe and the United States has been decimated by the Chinese switch from bridled communism to unbridled capitalism. European social disintegration stems from disemboweling of its industrial underpinnings. There is nothing to prevent that from happening here. And for us to wait until every last one of the remaining 150 million unemployed Chinese to be employed at a weekly wage equal to our hourly in the evanescent hope that jobs will migrate back to the United States because there are no further coolies left in China has got to be the most foolish, if not dumbest, plan of all. We should do what the Japanese and the Industrial Tigers do. They take a more pragmatic approach by limiting Chinese imports to protect their domestic economies. We, of course, can't — would someone tell me why?

Roy Nersesian, a resident of Maplewood, teaches at the Leon Hess School of Business at Monmouth University in West Long Branch and also at the Center for Energy and Marine Transportation at Columbia University. He has authored several books, the last on Energy for the 21st Century published by M.E. Sharpe.