Innovation/Global Risk

Whom Do We Serve? The Asymmetry That Is Screwing American Workers

By Shlomo  Maital   



 Clyde Prestowitz

A recent column by NYT columnist Tom Friedman (Jan. 28), and a powerful blog by former Reagan trade negotiator Clyde Prestowitz (Foreign Affairs, Jan. 31),  focus on a bitter asymmetry in global markets that is screwing American workers. 

     American companies, and European ones too, operate as if there were no geographic borders in the world, and deploy their businesses wherever it is profitable to do so. As Victor Fung, chair of Li & Fung, Hong Kong’s oldest  textile makers, put it: “source everywhere, manufacture everywhere, sell everywhere”.  As a result, Apple generates about 40,000 jobs in America, and directly and indirectly, 700,000 jobs outside it.  

    But what about Chinese companies?   Do they, too, act as if they serve only their shareholders, and disregard the national interests of the Chinese people?  Do Japanese firms?  Russian firms?   Prestowitz notes, “…China, Japan, Germany, Korea, Brazil, Taiwan and Russia all engage in a significant degree of protectionism, and are also the ones presently enjoying the most success”.   Raw protection is the breakfast of champions, Prestowitz quotes an expert.  Yet America continues to trumpet “free markets”, even though global markets are far from free.    Globalization is not always win-win, Prestowitz notes, echoing a famous finding of MIT Economist the late Paul Samuelson.   The assumptions underlying the “free trade is always win-win” theorem simply don’t hold, not a single one of them.   

    America is capitalist. Much of the rest of the world is mercantilist (seeking export surpluses through overt and covert policies that punish imports and subsidize exports).  As a result, America’s workers and its middle class lose.  America’s capitalist, who pocket the profits, gain. 

    Whom do we serve?  America’s CEO’s answer: Money.  Only when they begin to answer, “the people of America”  will America’s job picture brighten.