As American as Apple Pie

At first, reviews for the ceremonial uniforms designed by Ralph Lauren for the U.S. Olympic team gushed in praise for the snazzy design. Then the news came that, although the uniforms were designed in the United States, they were manufactured in China.

With that, a bipartisan gallery of politicians and celebrities came forward to express outrage that the uniforms were not manufactured in the United States. Charles Schumer, senator from New York, angrily said the U.S. Olympic Committee should be “ashamed of themselves.” Donald Trump tweeted “burn the uniforms,” and Senate Majority Leader Harry Reid thought that was good advice: “They should take all the uniforms, put them in a big pile and burn them.” The House Speaker John Boehner added a more measured scolding simply saying, “You’d think they’d know better.”

“You’d think they’d know better.” Indeed! The politicians and celebrities might as well have been demanding that physicians start practicing bloodletting again.

Their economic advice, if followed, will lower incomes of Americans, increase unemployment, threaten world peace, and impoverish billions in the developing world. Let’s be thankful that, as Will Rogers once quipped, “we’re not getting all the government we’re paying for.”

One can’t help but wonder how much of this over-the-top reaction would’ve been elicited if, for instance, the uniforms were manufactured in England. However disgusting, bashing China is apparently good politics, given the economic literacy of Americans.

Back in the 1980s, Lee Iacocca, then the lionized CEO of Chrysler, was urged to run for president.  Was that because of Iacocca’s great leadership ability? Was it because his made in America cars were competitive with Japanese imports? No. What fanned his fame was his ugly campaign blaming the Japanese for Chrysler’s failure to sell economically viable vehicles in the United States.

The textile industry in the United States has a long history of seeking protection. As far back as 1791, Alexander Hamilton thought that the infant textile industry deserved a few years of government protection.  In 1816, an 83% tariff on cottons was enacted. And, the disastrous Smoot-Hawley tariff act of 1930 raise tariff duties for some wool products by 387%.

Bernie Sanders, senator from Vermont, added what was a seemingly more nuanced protest as he made the connection between unemployment and outsourcing the manufacture of uniforms: “At a time when millions of Americans are unemployed, there is no reason why U.S. Olympic uniforms are not being manufactured in the U.S.”

So, let’s get to the central questions: Would reducing Chinese imports raise or lower unemployment? Would it raise or lower American wealth?

Suppose we completely eliminated Chinese imported clothing. The cost of your clothing would increase dramatically. Some manufacturing jobs in the textile industry might be created in United States, while others would simply shift to other developing nations, such as Vietnam. I suppose we could then ban all imported clothing from developing nations. That would create further jobs in America in the textile industry.

The key words are in the textile industry because jobs would be lost in other industries as resources were misallocated. Because of your increased clothing bill, you would buy fewer clothes or spend less on other goods and services. Simply, your wealth would fall. For example, you might not go out to your favorite restaurant for dinner, you might not purchase the latest iPad, or you might postpone a needed dental treatment.

What makes a textile worker more important than those who are employed in restaurants, those who are engineering apps for the iPad, or those who work in a dental office?

Perhaps there is an even more important question we should be asking: Would reducing Chinese imports raise or lower world tensions? James Bovard observes in his book, The Fair Trade Fraud, how U.S. Textile manufacturers “inflamed public hostility towards Japan” and help poison relations before World War II.

Equally important is another question: What would a trade war mean to the poor in developing countries? You or I would not want to work in a textile plant in China, in Vietnam, in Haiti, or in Cambodia. Yet, these jobs actually improve the standard of living of those who eagerly seek them. How could this be? Workers are paid more in far fewer hours at a textile plant than at the agricultural jobs they often flee from.

For example, Tom Worstall writing in Forbes, tells the story of Cambodians working in sweatshops to provide Olympic merchandise for England. The conditions sound terrible—until you realize that women agricultural workers in Cambodia work up to 18 hours a day for far less pay. Conditions are improving; Phnom Penh, the capital of Cambodia, is developing a breathtaking rate as this article explains.

The United States has always been a nation of traders and immigrants. True to our highest purpose, the Olympics should be an opportunity to promote world peace; it should not be used by politicians to promote xenophobic intolerance. Buying from another country goods which are more cheaply produced there is as American as apple pie.

Olympians, march proudly in your American designed, Chinese made uniforms. The purchase promotes prosperity in both countries, and it promotes world peace. What could be more patriotic and American than that?

One Response to As American as Apple Pie

  1. Gabe says:

    Great post and it made me want to go read David Ricardo again.

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