Cost of Buying Foreign Is Loss of U.S. Jobs
You cannot buy an all-American car today, no matter how enthusiastic you are about the theory that if enough of us bought U.S.-made products, we could help solve many of our most serious economic problems.
More patriotic buying habits, it is argued, would reduce the dangerously high national debt, the disgraceful number of jobless workers and the grotesque trade deficit.
Every car made in this country has some foreign parts, however, and it may be too late to significantly slow the flood of other products from abroad. Even so, the problems stemming from our reliance on imports still are with us, and efforts must be made to solve them.
Some General Motors products come close to being 100% American, but up to 20% of the cost of producing some Chrysler and Ford models is for foreign-made components. Much less “American,” of course, are the “transplants,” cars like Toyota and Nissan that are being assembled in this country but that mainly consist of parts imported from Japan.
And, obviously, “captive cars”--those made abroad by U.S. companies such as Chrysler’s Champ and Colt--are 100% imports even if they proudly display their American names.
David E. Cole, a University of Michigan automotive expert, and Harley Shaiken of the University of California, San Diego, estimate that up to 15% of the average “Made in America” car is foreign-made. They estimate that that figure will double in the next five to 10 years.
All of this means the loss of more and more jobs in the U.S. auto industry, whose employment has fallen by an estimated 200,000 in the past eight years. And, if things don’t improve, nearly that many more could be lost by 1990.
The auto industry is not the only one hemorrhaging because of imports. And some companies and even entire industries are making a valiant attempt to spread the “Buy American” word.
For instance, the nation’s textile manufacturers, cotton growers, garment makers and their unions have joined forces in a yearlong, $40-million nationwide advertising campaign starring Bob Hope. The campaign urges Americans to purchase “Made in America” apparel, sheets, towels and the like.
But the impact of that and similar campaigns has been slight, even on patriotic corporate executives, because their patriotism is outweighed by the prospects of making higher profits by hiring cheap foreign labor. Consumers tend to ignore the appeal because they figure they might save a few dollars by buying foreign-made products, especially when they think they’re getting a higher-quality product.
This means Congress must face up to the difficult challenge of devising some “fair-trade” legislation to curb the continuing loss of millions of jobs. The House passed such legislation recently, but it died in the Senate.
With a Democratic Senate majority in January, some version of the proposed fair-trade law almost surely will be adopted by Congress next year. Unless some compromise can be reached with President Reagan, he is expected to veto it.
But with so much of the beleaguered Reagan’s energy going to defending his foreign policy capers, Congress may override a veto.
Reagan and other foes of efforts to curb job-eating imports talk glibly about the value of “free trade.”
They denounce fair-trade proposals as “protectionism,” which they say will trigger devastating world trade wars and cost the United States more jobs than it will keep for American workers.
Other countries are much less enamored of free-trade policies for themselves.
Just one example: Many nations, especially in the Third World, require that at least 85% of all cars sold within their boundaries be produced within their borders. And the 15% limit includes all imports as well as cars assembled in those countries with foreign-made parts.
Reagan argues that while we are exporting millions of jobs, millions of new jobs are being created here each year so that, on balance, all is well in America, the “Great Jobs Machine.”
But the number of Americans who want work is growing as fast or faster than the number of new jobs.
Even more disturbing is that more than half of the 8 million net new jobs created from 1979 to 1984 paid less than $7,000 a year, well below the $10,989 the government defines as the poverty line, according to a congressional study issued last week.
The middle-income share of new jobs dropped 17%. High-income jobs--those paying $28,000 or more--fell by nearly 500,000 from 1979 to 1984.
And once relatively comfortable American workers aren’t comforted by the rapid increase in the number of “disposable employees.”
Disposable, or contingent, workers are those who are hired only when needed to supplement “core” workers who have steady, full-time jobs that usually provide significantly higher pay and much better fringe benefits.
An astonishing 25% of the nation’s work force is estimated to be disposable, or contingent, employees. They cannot count on a regular paycheck. Their ranks include those who work part time, sometimes involuntarily, and those hired by contractors and worker-renting firms whose employment needs rise and fall rapidly and frequently.
These are not good times for those of us who believe in the “trickle up” theory of economics, the theory that we should pay workers enough so that they can buy enough goods and services to keep the economy humming.
Family income has not risen during the past decade even though more women are working today than ever before. Two workers in a family should mean a significantly higher family income. That’s the American way.
The “Buy American” campaigns don’t seem to be doing much to stop the decline in the purchasing power of the average family’s income.
But we can do some things to prevent further erosion of the American standard of living that has for so long been the envy of the world, including:
- Keeping up the “Buy American” efforts.
- Enacting fair-trade legislation to make sure we are not swamped by goods produced abroad.
- Establishing policy commissions representing industry, labor and government to devise ways to meet legitimate foreign competition.
- Agreeing to union contract clauses and passing legislation that will curb the rapid increase in subcontracting by companies that pay outside workers, either in this country or abroad, substantially less than their own employees to do similar jobs.
Perot Points Zapped
It isn’t quite fair to compare Texas billionaire H. Ross Perot with a possibly apocryphal constituent of President Abraham Lincoln, but perhaps the comparison isn’t too far off the mark.
Lincoln was said to have received a book from a citizen with a note asking him to read and comment on it because it contained both new and interesting ideas.
Lincoln replied that the book did, indeed, contain interesting and new ideas, but unfortunately the new ideas weren’t interesting and the interesting ideas weren’t new.
General Motors recently agreed to give Perot a “go away” present of $700 million; the company decided to buy back Perot’s shares and to oust him as a GM director and as chairman of its Electronic Data Systems unit.
The GM executives didn’t like Perot’s harsh, public criticism of the company or his ideas.
There may have been other ideas offered by Perot, but GM sources insist these were his main contributions:
- Repeatedly stressing the interesting observation that GM isn’t doing as well as it should with the vast sums it is spending on research and development, a general point that is surely not new.
- Proposing a profit-sharing system, which GM already has.
- Urging the construction of more modernized plants and fashioning a more cooperative style of labor relations as is proposed for GM’s planned Saturn facility in Tennessee. This, too, already is in the works.
- Opposing year-end bonuses for GM executives that already have been denounced by just about everyone except the GM executives themselves.
Perot’s new idea was that GM auditors should not audit the books of Electronic Data Systems, which he sold to GM two years ago. His own auditors would do that, he said. A new idea, and interesting, too. But it is easy to see why GM and others might not view that Perot idea as a valuable way to get GM moving again.
