[IP] more on Maybe there's no mystery after all
Date: Tue, 06 Jan 2004 12:18:34 -0800
From: steven cherry <steven@xxxxxxxxx>
Subject: Re: [IP] Maybe there's no mystery after all
With all due respect to Mr Capek, there needs to be a balance struck
between protecting U.S. jobs and protecting U.S. businesses from
international competition. We've seen time and again -- in textiles and
apparel, steel, automobiles, aerospace, and so on -- that American jobs can
be protected only for so long, and the longer one waits, the more painful
the correction.
I remember speaking with a New York fur manufacturer in the mid 1980s. This
fellow's business was to import raw hides and finish them, so that furriers
could make coats and jackets from them. All of his competitors had moved
their businesses overseas, and he just couldn't compete anymore. He told
his workers that he was opening a factory in the Dominican Republic. New
business would be handled there, his existing accounts would remain in
Brooklyn. His workers told him that was unacceptable. He thought long and
hard, and made the extremely difficult decision to move *all* his work to
the Dominican Republic. The Brooklyn factory was shut down, and the U.S.
workers lost their jobs right away. It was either that, he told me, or have
no business -- and no jobs -- at all in just a few years.
A few years later, I had a similar conversation with a Connecticut
manufacturer of copper piping who was beginning to move production to
Taiwan. I couldn't believe that something like pipe, with its relatively
enormous transportation costs (and customs duties and added insurance
costs) could be made more efficiently thousands of miles away, but it
could, simply because of the equally enormous differences in labor costs.
In the *very* long run, overseas wage levels increase and an equilibrium is
achieved. It's not that different from the ways that wage discrepancies
within the U.S. have narrowed in the last 50 years, and jobs have moved
around more easily with better roads, telecommunications, and other
infrastructure. Getting there, though, will be painful, and it's hard for
white-collar workers to be sanguine about being the new victims at the
whipping post of open markets.
Steven
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