Home of Today's Common Sense

Published Brownsville Herald February 29, 2011

The best possible circumstances all result from free trade; the worst result from nanny government control. Those in favor of socialism often mis-describe, or just misunderstand, international trade.
A September letter to the editor from Jesse Dorsett asserted that if President Lincoln were alive today he would have added to his quote, “If you love labor, if you value the work of the American worker, then you have to hate free trade. …”
Shortly after I retired from a career with the U.S. Customs Service, where I was involved in enforcing our trade requirements, I taught a practical program in international trade at the University of Texas at Brownsville. During that program we examined and dispelled many policies such as the need to severely restrict and control trade to protect jobs.
Further, I cannot support any concept based on hate and have found that folks capable of attaching such an intense hostility find it difficult to accept reason and support acting out as a solution.
The most dangerous enemy to labor in this country is government control and standardization; not free trade!
That view of how we should relate to our neighbors would only mean isolation and encourage hostility, just as it did between England and its colonies.
The last thing we need is to bring back protectionism. It will not bring back our labor force, nor will it bring back our jobs!
The truth is that no government can create or send jobs anywhere by itself. It can only create some influences such as how import requirements are enforced, the increase or decrease of tariffs etc. Only business owners can create jobs, based on the ability to sell a product for more than it costs to make or buy it.
U.S. job loss has more to do with international trade dynamics. The prevailing theories are Heckscher and Ohlin’s theory of factor proportions: “A country that is relatively labor or finance abundant should specialize in production and export of that product that is labor or finance intensive,” and Vernon’s product cycle theory: “A country that has a comparative advantage in the production and export of an individual product changes over time as the technology of the products’ manufacture, matures.”
So, things are manufactured where it can be done most efficiently. This changes over time as the need for the product and the technology for making it change. If something can be made better and at lower cost in another country, the makers will tend to go there.
Legislatures affect how costs influence business far more than any president. Taxes, legal liabilities, entitlements and regulations all help or discourage business choices and where products are produced. Social conscience, while a necessary thing, has costs; and some of these costs make it impossible to continue some kinds of production and jobs in our economy.
Only a few years ago Germany was an economic powerhouse; however social benefits required that tax costs be increased enormously on “corporations and the rich.” This increase in socialism resulted in an unemployment rate of 15 percent and growing. The same thing happened to Ireland, which just a few years ago was the “golden choice” of the stock markets that funded higher investment and production.
We must also consider that the United States is on the precipice of reducing our number of available employees enormously in a few short years as the baby boomers retire faster than new workers can replace them. New immigrants will be necessary to just to replace those leaving the work force and to pay into the social services that support the retirees. This will require a more efficient immigration system, not more restrictions.
The bottom line is that we (not the president) are not only sending our jobs to India, China and Mexico, but we are creating a revolution to the traditional American system by creating more services and entitlements that the government must provide and more rules that companies and public institutions must follow and prove that they are following. These things have enormous costs to our ability to produce!
A last thought: I have heard a number of politicians and news people lately describing the federal retirement system as being too generous to the employees as they receive better benefits than others.
The Federal Employees Retirement System, according to former colleagues, promised to provide adequate resources for comfort in the “golden years” as living and health costs continue to rise. This estimate has proven true even in light of some recent investment issues, especially considering the complaints in the press that federal retirees are doing too well. Had we started changing the Social Security system to a similar program when it was proposed, perhaps the federal expenditures would not now be in such a mess. We need a government that will reduce government interference in our business and our personal lives. Then “We the people” can solve our problems as was contemplated those 235 years ago.