Are Americans willing to buy U.S.-made products when the quality is good and the price is right? Or are they hopelessly addicted to the idea that made-in-America is the mark of inferiority?
For anybody over 30, it is a depressing sign of the times that such a question need even be asked. Before U.S. industry frittered away its reputation, the superiority of most American products was generally taken for granted. But times have changed--and the massive U.S. trade deficit is the symbol of that change.
The Oct. 19 stock market crash was widely attributed to the perception in the financial community, both here and abroad, that this country was not taking adequate steps to deal with its huge budget and trade deficits. That concern may have been exaggerated, given the positive trends in both cases, but perceptions have a reality of their own.
The American political system's obvious difficulty in dealing with the budget deficit was made plain all over again in the recently completed "summit" negotiations between the White House and congressional leaders.
The concentration of attention on the deficit-reduction problem, together with the disappointingly slow improvement in the U.S. balance of trade, has helped to obscure some good news:
U.S. manufacturing, which just a few months ago seemed to be losing the fight for survival against foreign competitors, is making a comeback. The question is whether the favorable trend will continue or run out of gas in the face of the national affinity for products made elsewhere in the world, especially Japan.
Industrial production is pointing steadily upward. In the last year American manufacturing companies have added 303,000 jobs, of which 63,000 were created in the last two months alone.
Exports are a major part of the explanation. Seasonally adjusted sales to foreign customers have been in a firm uptrend all year, with merchandise exports rising twice as fast in the last four quarters as in the previous four. Many economists expect U.S sales abroad to grow even faster in 1988.
A lot of factors are involved, including a more competitive spirit and rigorous cost-cutting. Most important, however, has been the fall of the dollar's value relative to other major currencies, which is supposed to result in higher price tags on foreign goods sold here and lower price tags on American goods sold abroad.
As the figures cited above suggest, the theory is working on the export side. Companies such as General Electric, Du Pont, and Caterpillar Tractor report rising foreign sales. Even the steel companies, whose problems looked terminal until a few months ago, expect exports to exceed 1 million tons in 1987 for the first time since 1983.
Logic tells you that healthier exports should be translating into an improved U.S. trade balance, and indeed the trade deficit is declining. But it is still at an alarmingly high level, and experts fear that it will remain there--not because of flagging exports but because of stubbornly high imports as reflected in official trade figures.
Part of the reason is that our trade figures are reported in dollars. When the dollar's exchange value goes down, the number of dollars it takes to buy a given volume of foreign goods goes up. The reduction in the actual physical volume of imports thus is much greater than the official data indicates.
Another factor is that many things, whether you are talking video recorders or certain kinds of computer chips, are simply not made in this country anymore. Either you buy products made in Japan, West Germany or other countries, or you don't buy at all.
Fortunately, there is a countertrend. When they have a choice, many American firms are cutting down on their purchases of foreign-made components. Many others are bringing major manufacturing operations back to the United States. Economists disagree, however, over whether U.S. industry can ever recover from its unhealthy degree of dependence on foreign suppliers.
On one point, however, practically everybody is agreed: The American consumer has become deeply imbued with the idea that foreign goods are better--or if not actually better, more stylish among the in-crowd--than competing products made in America.
Efforts are being made to change this mind-set by draping Old Glory around American-made products. Such big retailers as K Mart, J. C. Penney and Sears Roebuck have run advertising campaigns to promote home-made products. The import-ravaged textile industry has run a "Crafted With Pride" campaign to promote the "Made in the USA" label on clothing and home furnishings.
But foreign-made products are still pouring in, finding ready purchasers even when prices go up. To a major degree, of course, that's because American manufacturers of many consumer items have abandoned the field to the competition. The lingering perception of the imports' superior quality remains a big factor, too, however.
Where foreign goods really are better, nobody can expect the prudent consumer to buy an American product which is not up to snuff. But even where U.S.-made items are available and are of comparable quality to the imports, most Americans automatically prefer the imported product these days. This is especially noticeable with regard to automobiles, where American producers have narrowed if not closed the quality gap.
Given the consumer-driven nature of the American economy, we're all in trouble if that mind-set continues. The Europeans, Japanese and other East Asians will grow more prosperous and we will grow poorer.
All the flag-waving in the world won't cure the U.S. trade deficit if American products are really shoddy and over-priced. But when they are in the same ball park with imported goods, surely a little pocketbook patriotism wouldn't be out of order.