When Trade Policy Hits The Real World

Friday, March 1, 2002

WhenTradePolicy Hits The Real World by Alan Tonelson (NAPSA)—America’s white-collar policy elites have long belittled the importance of manufacturing, especially in so-called “old economy” industries like steel, apparel, and even automobiles and machine tools. In particular, they assure us, workers in sectors los- ing their jobs to imports will simply find better jobs in service or high tech industries. The experts might think differently if they ever examinedthe realworld consequences of their giveawaytradepolicies. Now, they can, thanks to a November, 2000 report from the consulting firm McKinsey & Co.. It shows why neglecting manufacturing—includingtraditional industries—isdriving Americanliving standards down. Like most of America, greater Greensboro grew jobs during the late 1990s. But virtually all of the jobs were service-sector jobs, which typically paid 33 percent less than the area’s average annual manufacturing wage of nearly $41,000. Worse, employment in the high-wage manufacturing sector stagnated at 52,000. And jobs in traditional manufacturing industries like textiles, apparel, and tobacco actually declined sharply. The net result? The typical Greensboro-area resident was poorer toward the end of the so-called 1990s boom than at the beginning. The McKinsey study projects that, if these trends continue, Greensboro will face lower regional per capita incomes, “a decline in the tax base, a loss of political weight within the state, and less moneyavailable for infrastructure investments, directly influencing the quality of life.” And indeed, all over the country, Some experts believe that America’s free trade policies could lead to economic woes. Greensboro’s job transformation and grim economic prospects are being replicated. McKinsey’s recommends that Greensboro respondlargely by fostering “high tech start-ups.” Yet even before the tech bust, Greens- boro could scarcely compete with the world’s Silicon Valleys—much less the Bangalore, Indias, with their rock-bottom wages, high productivity, active government sup- port, and unfettered access to the U.S. market. Even during the late-1990s boom, Greensboro cre- ated fewer than 2,200 net new high tech jobs. Without pro-manufacturing trade policies, America’s many Greensboros will be stuck rearranging the deck chairs on the Titanic—and paying consultants to studyit. Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).