American Prosperity: Made in China

By image - September 13, 2003

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You may have noticed that many of the things that you buy in America today are labeled Made in China.  Of course not all are made in China, there are a variety of third world countries from which our products come.  China, Indonesia, Taiwan, Honduras, and Nicaragua are just some typical examples of countries that produce a large portion of products that are sold in American markets.

This used to cause a bit of outrage among Americans, which was commonly voiced by people like my late grandfather.  That outrage typically took the form of contempt for the perceived loss of American manufacturing jobs, contempt for the loss of pride in American manufacturing.

Over the years, since the reopening of trade with China in the 1970s by Richard Nixon, the most common criticism of the huge influx of foreign products has come from people who view this phenomenon as a threat to American jobs.

Allan Greenspan and other "free traders" have argued that the loss of American manufacturing jobs will be compensated for by an increase in more highly paid service industry and technology jobs.  Even assuming that this is true, which it has not proven to be entirely, it still presents a problem in terms of the American job market by moving jobs overseas that many Americans want.  If we take away manufacturing jobs here and expect a rise in more highly skilled jobs to make up for this, then where does that leave the less highly skilled American workers?  It leaves them with no reasonable job prospects because their jobs are now in China, Nicaragua, Korea, or elsewhere. They then have to take even lower quality service industry jobs, such as perhaps a garbage man or fast food worker or car washer or something of that nature.  So, one effect of this on the American job market is fragmentation, a growing separation between higher skilled jobs and lower skilled jobs, with fewer jobs in the middle for the medium skilled workers.  Yes some higher paying and higher skill level jobs are created, but we have workers of a wide range of skills, they are not all suited to only more highly skilled technology sector jobs.  Those that cannot fulfill the higher skill level jobs are then left to fall back to jobs that are below them because many mid range jobs have been shipped over seas.

Today, however, it seems as though foreign made products are so common that people have simply given up at being outraged about them.  It used to be that people tried to buy American made, but I think that most of us know now that this is a futile effort, and that in many cases its not possible to find an American made product of a certain type.  In any major store that you go to today in America you may find that as many as 90% of the products are not made in America.  Just go to Wal-Mart or Home Depot and walk down the isles and look at the labels to see where the products are made.  You will find that virtually everything you look at is made in some third world country.

The problem goes well beyond the effects on the American worker though; the largest part of this problem is actually the plight of the foreign worker. Though outrage among Americans about the huge trade deficit typically centers on the American worker, the American worker is not the only victim here.

In fact many Americans view the other victims of this situation with contempt and believe that they are the ones responsible for the situation.  Many Americans view the foreign workers as "stealing their jobs".  Its not foreign workers who are causing this situation though, it is American companies and the American government.

Many of the products we see in America that are manufactured in third world countries are not being sold in America by foreign companies, they are being sold in America by American companies.  American companies are the ones who lobby American law makers to allow this type of trade to happen and they are the ones that choose to have their products made overseas because they can get them made cheaper in foreign countries.  This is a situation that is created by American companies with cooperation from the American government, and that is where the outrage, if any, needs to be directed.

As I said though American workers are not the only victims here, foreign workers who are making all of these products are victims as well in some situations.

If the foreign workers are getting "our jobs", then why and how are they the victims?

They are the victims because even though they are actually working for America, they are not protected by American labor laws and they are not a part of the American economy and they have none of the rights of American citizens.  There are people in foreign countries that work their entire lives producing goods that are never sold in their own country.  Everything they make gets exported to America or other Western countries. They are for all practical purposes American workers, they just happen to live in a different country.

In fact American businessmen, companies, and government officials have encouraged government and industry leaders of these countries to keep labor laws weak and keep the prices of labor and raw materials low in many cases.

The immediate concern of any American company is to secure goods and services for as low a price as they possibly can and then sell them for as high a price as they possibly can.  The easiest way to do this is to sell products made in third world countries in developed countries, in our case, America.  In order to do this companies go overseas and secure lucrative deals with governments and local businessmen for cheap labor and resources.  American businessmen contribute to local political and community leaders and programs that support their pro-industry agenda.  They also contribute to American politicians who promote a foreign policy agenda that is beneficial to the wants of their company, which is to keep labor costs low in these countries, make trade as cheap as possible, and keep leaders in power in these countries who are loyal primarily to America, not their own citizens.

Essentially what has happened is that international American businessmen have often ended up doing business with the most corrupt and exploitive of the native people, who are willing to work with the interests of the American businessmen for personal gain, instead of with the interests of their own community in mind. It is no coincidence that companies such as Wal-Mart work almost exclusively with the totalitarian regime of China. This is how they get their profits.

This is not just a case of "foreign" countries either though, there is also an issue with American territories, such as Guam, Saipan, American Samoa, and the US Virgin Islands.  None of these American territories abide by all of the same labor and tax laws that American states have to abide by.  This allows American businesses to easily exploit weak labor and tax policies by establishing businesses in these territories, and in most cases products made in these places can qualify to be labeled "Made in USA", even though it is actually made in a US territory under different environmental, labor, and tax laws, where American minimum wages may not apply.  In fact St Croix, in the US Virgin Islands, is home to one of the largest oil refineries in the world. Many GAP and Nike products are made in Saipan where women from China are shipped in and forced to sign labor contracts in order to get work.  These labor contracts make them essentially indentured servants for several years. The women sometimes have to pay in order to get the jobs and then they end up working for several years just to pay back the cost of getting the job, therefore the first few years of their work is essentially free labor. These companies are also known to regularly violate their own published codes of conduct, such as not employing child labor or using forced overtime. They do things like simply not asking for the age of workers when they apply and then claim they simply didn't know that the girl was 12 years old if the issue is exposed, in many cases that is all it takes to get "off the hook" at this point. They also regularly force workers to work 7 days a week 12 hours a day with the threat of losing their job if they do not.  This is again against their own codes of conduct, but it may not be against the law, so there is no way to enforce these rules.  The companies simply publicize their codes of conduct to make consumers "feel good", but there is no strict enforcement of the regulations.

Where businessmen have been able to affect policy they have done so. As long as they can lobby and pay government officials, be they American government officials or foreign ones, they continue to do so in order to benefit themselves as much as possible. This is only natural, but it is our job as citizens to take notice of these actions and speak out against them when need be. The prosperity of many American companies has been built on the exploitation of foreign workers.  

The American trade deficit is continuing to grow. American consumers are being presented with a rapidly increasing variety of cheap and wonderful products. Those products are partly the result of the ability of American companies to exploit foreign workers in a way that they would not be allowed to do here in America. In these third world countries workers are often paid less for one month's work than the profit a company makes off the sale of one single item. So, for example, the profit that The GAP makes off the sale of one $60 shirt is often more than what they pay the worker to make those shirts for an entire month. This often thrills American consumers, who, in the wealthiest country in the world, are happy to go to the store and be delighted to see products so cheap they can hardly believe it. "Have you seen the sale at the Old Navy? My God I found the cutest little blouse there for just ten dollars, it was so great!" Meanwhile, 10 Chinese teenagers are living together in a shack with no electricity and working 7 days a week 12 hours a day to make that blouse and getting paid about $30 a month each.

Despite the fact that the flood of new and cheap products into America over the past 20 years, especially the past 5 years, has delighted consumers, its hard to consume anything if you don't have a job. 

Many people propose a variety of solutions to protect American industry, such as tariffs, tax incentives, or a lowering of the labor and environmental standards in America. This is all the exact opposite of what should be done. American business has worked over the years to keep labor and environmental standards low in foreign countries for their own benefit and now American workers are having a difficult time competing. Obviously the solution here is not to lower standards for American workers, it is to work to raise the standards of the people of the world, that is the just thing to do for the citizens of the world and its also what will help to protect American jobs. When companies can't subcontract labor out to China or Honduras or even American territories like Saipan for significantly less than American minimum wage where they have lax environmental standards, then some of those jobs will stay here. By the same token if we support progressive leaders in foreign countries who look out for their own citizens as their top priority then those countries will see an increase in their standard of living and become increasingly able to fuel their own economy with their own domestic demand.  When we see things like the worker strikes in Venezuela, which cost us Americans at the fuel pumps, we have to also remember that it took strikes like those, and many more for years in America, to get the types of labor laws that we now enjoy here.  We have to be patient with foreign workers and support their right to protest and their right to demand increases in quality of life. In doing this we will not only help the citizens of the world, but we will help ourselves as well.

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