America Can Find Courage in Saying, ‘Know More’
Why are so many Americans afraid these days and what can help them regain their old self-confidence?
They’re afraid because they no longer believe that the old post World War II-Marshall Plan formula really works--that America benefits as other countries grow richer.
They’re afraid because this year’s trade debate is unusually harsh. Opponents of treaties with Mexico or with 109 countries worldwide claim that trade alliances only favor corporations that want to “send jobs away.”
And many Americans are afraid because the U.S. system has failed to educate and prepare all of its working people for advanced industry, and now has catching up to do.
The charges are false, but the fears are real. Distrust of foreigners has become corrosive just as the United States approaches Wednesday’s vote in the House of Representatives on the North American Free Trade Agreement (NAFTA) and the renewal next month of the General Agreement on Tariffs and Trade (GATT).
NAFTA is critical for more than Mexico. If it wins, President Clinton can meet confidently at week’s end with Asian-Pacific leaders in Seattle and the world economy could see a burst of prosperity in this decade.
But if NAFTA loses, look for U.S. stocks to fall sharply, says David Shulman, research director of Salomon Bros. Current high prices in U.S. markets reflect anticipation of an expanding global economy, Shulman explains. A NAFTA defeat would dash such hopes while also dooming GATT and weakening Clinton’s presidency.
Knowledge is the antidote to fear. Americans urgently need to better understand how the world really works. To do that they should first examine the pattern of Europe and the United States over the last 40 years.
And then they should think about South Korea, a country that with U.S. help has gone from subsistence agriculture and the ravages of war to prosperity in only three decades.
In Europe, the accumulated value of U.S. business investments since World War II now totals $500 billion at the very least. Those investments were made to gain markets and build relationships, not to send away jobs. As a result, $400 billion worth of goods and services flow both ways across the Atlantic every year.
U.S. electronics and computer firms alone get more than a third of their business from Europe, where they dominate many markets. That means investments in Europe account for jobs in San Jose and Los Angeles and the areas around Chicago, Boston, New York, Philadelphia, Houston and Dallas.
Now the focus is shifting to Asia and Latin America, where U.S. business historically has fewer investments--some $50 billion in Asia, $70 billion in Latin America. But that is changing as U.S. companies increase investments and form partnerships with an eye to creating on the Pacific Rim the success they achieved on the Atlantic.
In Mexico, particularly, entrepreneurial U.S. companies are getting involved--forming partnerships, setting up businesses. That is, they are enlarging the scope of their U.S. companies, not relocating them.
The patterns are the same whether the industry is traditional or advanced. In apparel, the higher skilled work of cutting and designing is done in New York or Los Angeles, but the hand sewing is done in Asia. If NAFTA passes, the sewing will come to Mexico from Asia, explains George Rudes of St. Germain Inc., a Los Angeles apparel firm. And that will create Mexican wages, and therefore new Mexican consumers for U.S. goods--thus expanding business for cutters and designers in New York and Los Angeles.
In semiconductors, highly skilled wafer fabrication work is done in plants in California and New Mexico, but assembly and packaging is done in Singapore and Malaysia. If NAFTA passes that assembly work will come to Mexico, creating more business in turn for U.S.-based companies, explains Regis McKenna, a Palo Alto consultant to high-tech industry.
The point is that opportunity will expand in the United States, but only for skilled work that demands education and training.
South Korea’s example is illustrative. A country of 44 million that has acquired a living standard approaching that of European countries, Korea faces a challenge. Its young people no longer want to do “dirty, low-wage jobs,” explains Jin-Hyun Kim, the Minister of Science and Technology. In any event, China will do such jobs for less than Koreans will work for.
So Korean industry has to “specialize, move on to more advanced electronics, more technical tasks,” explains Kim. Yet Korea is perhaps better prepared to move on than its old U.S. mentor. With an economy only slightly larger than that of Mexico, Korea has educated its work force well--the country’s literacy rate is 95%, and computer-assisted instruction starts in the lowest grades. Its young people are impatient for the newer, more demanding jobs.
By contrast, too many of America’s young people are fearful of losing jobs to “foreigners” or to technological change. Their literacy rate, in an economy 20 times the size of Korea’s, is 75%.
America has been careless. Its industry and government, managers and unions have allowed unskilled workers to remain so and concluded that it didn’t matter if some were left behind in an advancing economy. So now the country faces a fearful opposition as it tries to move on to a world brimming with possibilities.
Again, knowledge is the antidote to fear. A massive “infrastructure” program that would play catch-up on education, along with apprenticeship programs for its work force--as the President and Labor Secretary Robert Reich have proposed--would be a good investment for America.
Americans should not turn away from an advancing world, but pass NAFTA and then take care that from now on we go forward together--or maybe we don’t go at all.
