Cheap Stuff — Or Is It?

In a recent editorial, writer Jesse Patrilla somewhat sarcastically commented on the consequences of a proposed economic boycott of China. "No large U.S. retailer is willing (read: stupid enough) to not carry Chinese products, " he wrote. "In the year following their 2004 joining of the World Trade Organization (WTO) and consequent release from quotas, the volume of Chinese clothing exports increased over 500 percent, and prices dropped almost 50 percent. If that’s just numbers to you, do this experiment: Check the perimeter to see if your boss is out of the way, duck in your cubicle and start checking your tags. Even if the leather on your shoes comes from Italy, the sole is Chinese. Your shirt? Yes, Made in China. Your underpants? Ditto."

He makes a good point: the textile manufacturing segment of the US economy has been essentially picked up and transferred from our own shores to the People's Republic of China. According to one source, one-third of the clothes sold in the United States comes from China, and only 6 percent of the apparel worn in the United States is made in this country.

And it's hurting our people. The American Manufacturing Trade Action Coalition has estimated that during the period between 2000 and 2004 the U.S. textile and apparel sector lost 323,000 jobs — 31 percent of its workforce — and that at least 211 textile plants in the United States were forced to shut their doors. The group attributes these losses to increased competition as a result of the dropping of import quotas from manufacturers in low-wage nations, primarily China.

But I don't know why we are complaining. We have gotten exactly what we wanted: free-market capitalism. In a free-market capitalist system, the ultimate goal is profit; therefore, to maximize profit, the shrewd capitalist keeps his or her manufacturing costs as low as possible. In a free-market capitalist economy, human labor is commodified, and, absent regulation, will seek out its natural commodity price, just like any other raw material. Right now Chinese labor (etc.) is the cheapest in the world; therefore, the capitalists of the world have moved their manufacturing to China.

There are alternatives to free-market capitalism: for example, a system in which the interests of a given nation or state are placed above profit. In such an economy, capitalists are free to do business as they wish so long as what they do does not harm the interest of their home nation. A government might for example enact laws preventing capitalists from going abroad to find cheap labor in order to prevent the nation's manufacturing base from being reduced in size, or to keep employment levels high, or to fight deflation. It might set high tariffs to keep foreign goods out in order to create markets for more expensive domestically-produced goods. It might choose to subsidize (via public ownership, tax exemptions, or direct subsidies) certain domestic industries (aircraft, shipyards, etc.) in order to ensure these industries continue to exist. Or it might choose to reimburse certain industries (railroads, power generation, etc.) against losses in order to maintain them at a "going concern" level for national security reasons.

All such forms of government regulation distort the operation of a free market, and thus the market's natural price-setting function. In short, citizens of a state with a regulated economy pay more for certain goods. However, in exchange for these higher prices they receive certain benefits that cannot be provided by the market: increased national security, higher employment (at inflated wages), and the psychological comfort of knowing that their homeland is still capable of producing physical wealth.

We as a nation have made our choice. We have chosen to elevate individual liberty over the interest of the nation. That is what Free Trade is. Therefore, when you hear that the American textile industry no longer exists, or that we as a nation have lost the capacity to produce our own ships, or that a foreign aircraft company has been awarded a contract to build military aircraft for our armed forces, do not complain. We wanted a free-market capitalist system, and now we must live with its consequences: a world where corporations are loyal to no one and nothing except their shareholders, and where human beings — once known as "personnel" — have become nothing more than commodified human resources.