Free Trade, Trump, And The Decline of American Manufacturing




In 1999, when I first started in the staffing industry, our branch’s largest client was a local bathing suit manufacturer and processing center. They had two plants in the area – one to sew the product and another to tag and package it for distribution to various retail outlets. Although there were definitely busy times where simply getting the numbers they needed was difficult, overall we didn’t have a lot of trouble recruiting for them because it was fairly light work that didn’t require specific skills. As long as you could stand up for eight hours or so and were willing to learn, you were in.

The work was seasonal. We’d work over a hundred there during the winters, but once summer began and the bathing suits reached the shelves they dropped down to a skeleton crew. It was a great gig for a staffing agency, a perfect fit for both us and them. Its hard to imagine even the most ardent staffing agency critic, even our friend “Temp Employees,” having a problem with this arrangement.

The pay was low and I suppose there wasn’t much opportunity, per se, for the temps, yet we placed many of the same folks there year after year for well over a decade. And we didn’t have to hit them over the head to come either – they were begging to go – Moms who wanted to work while their kids were in school and take summers off, grandmothers who enjoyed the work and being with their friends but liked a rest every now and then, even the occasional kid looking for warehouse or shipping experience or just something to do before taking the plunge into a real career – we helped them all and it was great

Great that is, until the company closed their United States facilities and shifted all their work to Mexico.

They weren’t alone, of course. Outsourcing has been a major contributor to the decades-long decline of the American manufacturing base. What used to employ a third of American workers in the 50’s now employs less than 10%. Less people working in one sector than a previous era isn’t necessarily a bad thing. Some of it is for the same reason fewer people work in agriculture than did in the 1800’s – technological advances in production and efficiency – and some of it is also because other nations are simply better at manufacturing certain things. After all, the principle of comparative advantage, the motto of free traders, when applied correctly isn’t wrong. If a person, a company, and even a nation has the ability to produce something at a greater efficiency and a lower cost, they should do that and trade with others who are producing what THEY are great at. Everybody wins!

I’d certainly rather get my coffee from Colombia than try to grow it in my backyard, right? And it’s really nice to be able to get fruits and vegetables that aren’t in season in my neck of the woods year round, even if they don’t taste nearly as good as the tomatoes grown in my own garden. If Mexicans want to specialize in bathing suits, that frees Americans up to innovate and get good at something else, like making robots to replace us all eventually. Trade is a good thing, and occasionally good people will lose out in the short-term, like our bathing suit taggers (and us!).

So why do protectionists like Pat Buchanan and Donald Trump rail about job losses? What’s their deal? Isn’t it just pointless, pandering populism meant to appeal to working-class folks who aren’t sophisticated enough to grasp the nuances of Adam Smith and David Ricardo?

Well, not exactly. The thing is, other countries, those that are interested in furthering their national self-interests, slap import tariffs on items coming from abroad, including the United States. We, on the other hand, often allow those same countries to bring in whatever they want and sell to our folks tariff-free or nearly so. While that may be great for the consumer, its a raw deal for Americans who lose their livelihoods because of it.

In short, it’s just not a level playing field, and that’s a problem. It’s one thing to lose an industry because of technological advances or because another country does it significantly better than we could, it’s quite another to have it happen because our leaders are betraying us. Sadly, that’s whats been going on, and that’s what lies at the heart of the blue-collar support for Trump. Truly, is it worth losing the pay Americans make from producing products here, the raw materials purchased, the taxes paid, just so Americans can buy cheaper products?

Low prices may be great, but at this rate, when the government imposes layer after layer of roadblocks, regulations, and taxes on American businesses while, with a wink and a nod, telling those same businesses they could do business with much less hassle and expense overseas, we’re going to continue to lose our manufacturing base. When that happens, where will Americans get the money to buy all those cheap products? And I hope your answer isn’t working in restaurants, because what happens when people can no longer afford to eat in them?


This article originally appeared on Staffing Talk.