As is usually the case in political malaise, those in power fail in the true sense when the will is lacking to search out causal relationships particularly where the economy is concerned because it entails treading on their own kind. This was evident at the onset of the trade deficit launched three decades ago by our own laissez-faire multinational corporations. They balked at American wages and fringe benefits and sought new labor markets abroad. Where was the government then to perform its regulatory functions? Even more important: where were the labor unions?


How many millions of American cars since then were made abroad, laying the foundation for huge trade deficits, not to mention the poorly mortared keystone of budget deficit by the growing loss in productive jobs at home and thus quality consumption? It would not take a crystal ball to reflect the outrage of Congress were the government to hand out defense contracts abroad — with the strain of war, although sadly, this is beginning to happen — yet our flag-waving patriots sit idly by while huge corporations plotted to undermine the economy. There is, however, one redeeming factor to the trade deficit that began to explode in the 80s: the wealthier these foreign countries become by dumping its products into this highly consumptive nation — the higher their wages, the greater their own consumption will be, and as a consequence their exports will dwindle and hopefully their imports will grow. However, that will be far into the future, the more the US persists in unfair trade agreements.


Gephardt of old was absolutely correct in proposing a new code of behavior in business that is not controlled by the bottom line and short term gain. There must be a business equation that includes the community and workers as well as profits and stockholders. Abroad, the government must enforce enlightened business behaviors. Diplomacy with the underdeveloped nations needs to be more aggressive to the brink of boycott — what is the logic of trading with underdeveloped countries that labor for bare needs while their thuggish leaders line their own pockets, indifferent to the desperate need of infrastructure? Multi-national corporations based here must also be put under pressure to improve the standard of living abroad, if for no other reason than to protect our own.


There has always been this resentment factor in the dilemma of capitalism: on the one hand it enjoys the profits created by the rise in the standard of living and thus consumption; on the other, it resents higher labor costs without which consumption and opportunity for growth and profit decline or stagnate. Nevertheless, the instinct for decent wages is a fact of life, in this nation particularly since the post war days. The more aware the world labor market perceives its needs beyond the subsistence level, the more truly competitive and productive trade will become, predicated on tool and craft quality — the real cost of production — rather than the cost of brute labor.

Copyright © 2004 Richard R. Kennedy All rights reserved. Revised: February 11, 2004.