more on Maybe there's no mystery after all

[Dave Farber <dave () farber net>]

Date: Tue, 06 Jan 2004 12:18:34 -0800
From: steven cherry <steven () panix com>
Subject: Re: [IP] Maybe there's no mystery after all

With all due respect to Mr Capek, there needs to be a balance struck 
between protecting U.S. jobs and protecting U.S. businesses from 
international competition. We've seen time and again -- in textiles and 
apparel, steel, automobiles, aerospace, and so on -- that American jobs can 
be protected only for so long, and the longer one waits, the more painful 
the correction.

I remember speaking with a New York fur manufacturer in the mid 1980s. This 
fellow's business was to import raw hides and finish them, so that furriers 
could make coats and jackets from them. All of his competitors had moved 
their businesses overseas, and he just couldn't compete anymore. He told 
his workers that he was opening a factory in the Dominican Republic. New 
business would be handled there, his existing accounts would remain in 
Brooklyn. His workers told him that was unacceptable. He thought long and 
hard, and made the extremely difficult decision to move *all* his work to 
the Dominican Republic. The Brooklyn factory was shut down, and the U.S. 
workers lost their jobs right away. It was either that, he told me, or have 
no business -- and no jobs -- at all in just a few years.

A few years later, I had a similar conversation with a Connecticut 
manufacturer of copper piping who was beginning to move production to 
Taiwan. I couldn't believe that something like pipe, with its relatively 
enormous transportation costs (and customs duties and added insurance 
costs) could be made more efficiently thousands of miles away, but it 
could, simply because of the equally enormous differences in labor costs.

In the *very* long run, overseas wage levels increase and an equilibrium is 
achieved. It's not that different from the ways that wage discrepancies 
within the U.S. have narrowed in the last 50 years, and jobs have moved 
around more easily with better roads, telecommunications, and other 
infrastructure. Getting there, though, will be painful, and it's hard for 
white-collar workers to be sanguine about being the new victims at the 
whipping post of open markets.

 Steven

-------------------------------------
You are subscribed as interesting-people () lists elistx com
To manage your subscription, go to
 http://v2.listbox.com/member/?listname=ip

Archives at: http://www.interesting-people.org/archives/interesting-people/