In Our Global Trading Village, Protectionism Has No Place
Six times a year Prof. Warren Bennis and the University of Southern California School of Business Administration bring together about 30 of the area’s chief executive officers for meetings with heavyweight pundits like Henry Kissinger, Peter Drucker and Robert Reich.
One meeting that I attended turned out to be quite interesting, particularly after dinner. We’d spent most of the afternoon listening to two Harvard-type management consultants talk about international competitiveness and how we were losing to the Japanese.
One of the CEOs, a venture capitalist, let go a real blast at their views. His criticism went something like this: “You two represent all that is decadent in the United States--old East Coast money, America’s biggest and least efficient companies and big government social solutions, Dukakis and the Democrats. Out here we’re seeding billions of dollars into fast-growing small firms. The innovations that we’ll harvest in the next 20 years, if the government just leaves us alone, will make the recent Japanese successes pale in comparison.”
A lively exchange ensued, juxtaposing two dramatically differing viewpoints of how best to beat the Japanese--industrial policy vs. laissez faire- stimulated creativity.
But both sides were missing the key point. It’s not us against them anymore. It’s not a competitive game. Like it or not, we’re now in the same boat with the Japanese. And if the right-side oarsmen pull harder than the left, then the boat goes nowhere.
Some people try to deny this perspective. When I was in Paris during the time of the Soviet nuclear-plant accident at Chernobyl, the French newscasts showed the nuclear contamination stopping at the French border. You had to wash your lettuce, but Russian radiation evidently didn’t have a passport. Then there’s the acid rain in Canada or Prince Charles’ banishment of hair spray from Buckingham Palace.
But if you won’t take the Sierra Club’s word for it, how about Merrill Lynch’s? The stock-market crash of 1987 didn’t just happen on Wall Street. Tokyo, London, Hong Kong, New York--who followed whom over the brink?
And what about Toshiba? It sells the Soviets computerized milling machines. The obvious response is to punish the Japanese manufacturer with a congressionally mandated boycott of all Toshiba products. But bashing Toshiba hurts the company’s U.S. partners and customers as well. IBM complains. Even the Pentagon prefers Toshiba laptop computers.
The implications of this global-village view are clear. The key to world peace and prosperity is a thriving and unrestricted international trade. It may come as a surprise to most, but the Japanese have been continually reducing their trade barriers during the 1980s, even faster than their 1979 GATT agreements. President Jose Sarney is cracking the door open to Brazil. The Chinese are slowly relaxing their restrictions--in addition to duck in Peking, now you can buy chicken a la colonel. And Mikhail Gorbachev’s reforms in the Soviet Union--could we have imagined Big Macs in Moscow even five years ago?
All this international commerce creates interdependence while promoting capitalism and freedom. The pending free-trade agreement with Canada is a crucial breakthrough. We need comparable agreements with Japan and others. Indeed, I wonder what Latin American politics would look like today if we hadn’t boycotted Cuban sugar so many years ago? Influence through trade makes more sense than Contra aid does.
Restrictions on free trade are a vile virus indeed. I can’t think of a better use of America’s military might than keeping the Persian Gulf open to commerce. And I can’t think of a worse example of congressional politicking than the omnibus trade bill that President Reagan vetoed on Tuesday, only to have the House immediately vote to override. Three years of Capitol Hill kibitzing has created more than 1,000 pages of labyrinth-like trade restrictions. The only way to understand the machinations of Congress on this one is to view the world through a xenophobia perhaps appropriate in times past.
Wake up, America. Smell the coffee. Contemplate the reality that your fresh brew comes from Colombia, and that many of the other things that you take for granted come from some other foreign country as well.
