A trampoline
is a thing you jump on. If you get really good at it you can do flips and all
sorts of amazing gymnastic maneuvers. Right now everyone is jumping on Donald
Trump so I thought I would jump on him too. Let’s call this a Larry Cannonball
on the Trumpaline.
I will leave
all the exciting stuff to other people and focus on the one thing that I think
I know a little about – industrialization and globalization. Okay smarty pants –
those are two things but in some ways they amount to the same thing because
they are known to chew up jobs. Industrialization is a force that has been
going on for centuries but it got a very hot reputation when it resulted in
tractors replacing horses and plows.
Ever since then we acknowledge that new
technologies and innovations destroy jobs. Of course, we have also learned that while each significant industrialization phase creates its own
destabilizing impacts the net result takes time and usually leads to not only more
national employment but also higher wages and incomes.
Lauren’s
great grandpa used to be the guy who blew out the candles in all the street
lamps in Bloomington. Electricity knocked him out of work but that whole electricity thing also
led to cool inventions like vacuum cleaners and blenders and pretty soon all
sorts of people had great jobs as electrical engineers and bar tenders. If you
take a big swig of JD, close your eyes, and think about your life you can
easily think of all the labor-displacing inventions that caused similar
disruptions but eventually came to be ho hum. I make light but these are no
small things. When the textile industry abandoned the NE part of the US – it wasn’t
very funny to those displaced by the invention of air conditioners that made
work in the South more tolerable. Now we all say "yawl" and I "guarandamnteeit".
Most of us
don’t fight industrialization very hard. We know it works. We like the fact
that all those street lamps can be turned off with the push of one button and
we like the fact that we can afford vacuum cleaners and bartenders. One of the
reasons we have social programs is to try to make the transitions a little
gentler. Helping those persons who become unemployed or otherwise disadvantaged
by change is both good for the head and the heart. So we usually embrace
change. Some of us love change but that is not necessary so long as society
allows these transitions. The truth is in the pudding since not many of us are
demanding a return to the horse and plow.
That brings
us to globalization. Globalization is pretty much the same thing as industrialization
except it allows us one more angle – the good guys (us) versus the bad guys
(foreigners). Globalization is the same as industrialization because it does
the same things – it creates havoc for some people while opening up avenues for
growth and change for the rest of us. If a company closed operations in Indianapolis
and reopened in Guadalajara Mexico you could hear the labor union and Donald
Trump screaming all the way to the South Pole. How dare those blankety blanks leave
Indianapolis to go to Mexico? They must be national traitors and they should be
hung in the public square or in the Hoosier Dome. Trump has made it very clear that he will
make America great again by pulling all those companies back to Indianapolis
and Detroit. Hillary Clinton is saying similar things.
It sounds
great. Let’s save American jobs. How can one argue with that? For one thing, it
amounts to asking us to return to horses and wooden plows. Industrial
transitions do not just occur in America. Now that dozens of countries are
freer to compete in global markets the marketplace for change is everywhere.
New ideas and innovations that improve our lives are developed and sold
everywhere. To think that all that stuff would always be made in America does
not make any sense. China will be the best place to make some items but even
China is outsourcing output to Vietnam. Mexico will be a place of manufacturing
for other things and they will outsource some of their supply chain to Chile.
To think that Donald Trump or anyone else can or should fight globalization is silly.
For another
thing fighting globalization means voting against change and the transitions
that actually make American workers worth what they want to earn – close to
$50,000 per year. We talk about greedy US companies who want to go to Mexico to
take advantage of lower labor costs in Mexico. Now they are greedy. Yesterday
and for how many years were those same companies employing American workers?
Unions might complain about this or that but the truth is that many people
raised families for decades because of the jobs offered by these companies. Were they greedy then?
I don’t know whether they are more or less greedy today. What they are doing is
fighting to succeed and in some cases to survive. Competition across the globe is intense. To
not change is to die.
So long as
the average income of educated and/or trained workers in many emerging markets
is less than $10,000 per year it is pure folly to think that US workers hired
at $50,000 will offer the best place to do business. To save the company and American jobs,
a US multinational will move some operations out of the US. Of course to save
the remaining jobs they will continually have to improve productivity of the domestic workforce or even the higher skilled jobs will be threatened. Think of wave
after wave of enemy combatants coming after your defensive position. Building a
bigger wall might work for a while. But what you really need is an advantage.
Trump vilifies
other countries for trying to come into the global economy and for daring to compete
with the USA. The only real solution to this challenge is not to regulate US
companies but to unleash them. Making America great means American companies winning
in the global marketplace. It means change and growth. Don’t tell me that
centuries of US growth are over. Tell me we have a plan to empower US companies
so they can do what is necessary to continue producing good jobs and incomes in
America. The world is not always a
fair place. Making it even less fair isn’t the solution. We have so many
advantages over emerging market competitors they are impossible to list. We should use them and quit bellyaching!
