Walter E. Williams

There's the "Free Trade but Fair Trade" crowd, and the "Level Playing Field" crowd, and the "America First" crowd, all calling for tariffs and other international trade restrictions. Their supposed adversary is corporate America, seeking to boost profits by either importing goods made by cheaper foreign labor or relocating plants in foreign lands to directly take advantage of cheaper labor. They claim that this accounts for the loss of U.S. manufacturing jobs and other economic woes. Their argument has considerable emotional appeal, but they've misidentified the true villain in the piece. Let's look at it.

Suppose U-Needa Shirt Co. relocated its production facilities to India in order to take advantage of cheaper labor. This is America, the land of the free. There is absolutely nothing that prevents a group of Americans as investors and workers from setting up Made in America Shirt Co. to sell shirts to the American people. This same opportunity exists for just about anything once manufactured in America but now made overseas.

At this juncture, let's take a thinking pause and ask: Is what Williams said in the previous paragraph true or false?

Let's proceed. You might ask, "How in the world can Made in America Shirt Co. compete with U-Needa Shirt Co., who has much lower labor costs?" That's a different question, but it has nothing to do with the rights of American investors and workers to set up American-based manufacturing facilities. But let's answer the question anyway. American consumers are free to purchase from whomever they choose. Made in American Shirt Co. would survive and prosper if American consumers chose to purchase shirts from it, rather than U-Needa Shirt Company.

Let's take another thinking break and ask: Is what Williams said in the previous paragraph true or false?

Here's where the crunch comes. It's probable that U-Needa Shirt Co., because of its lower costs, will be able to undercut prices charged by Made in America Shirt Co. Thus, we encounter that troubling consumer characteristic of preferring lower prices to higher prices.

So what to do? Made in America Shirt Co. might try to change American consumer preferences so that they're indifferent between high and low prices. I predict that's a strategy doomed to failure, except maybe for a few diehard customers. There're no two ways about it. The true enemy of Made in America Shirt Co. and its workers is not U-Needa Shirt Co. but the American consumer and his preference for lower prices coupled with his freedom to purchase from whomever he pleases.


Walter E. Williams

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of 'Race and Economics: How Much Can Be Blamed on Discrimination?' and 'Up from the Projects: An Autobiography.'
 
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