Last week the US senate passed a bill aimed at punishing China for currency manipulation with tariffs, which is stupid for a number of reasons, but I want to talk about the underlying narrative that springs up every election cycle in Washington: Those cheating abusive Chinese commies are stealing our hard-earned American jobs!
Dozens of congressional candidates ran ads to this end in 2010. Perhaps the most articulate was this one for Ohio Congressman Zack Space, where it shows a crowd of a dozen Chinese people and says, “Gibbs (his opponent) wants more free trade with China to increase their standard of living.”
Then it cuts to a lone white man and says, “…but what about Ohio?”
It perfectly captured the attitude many Americans, and ergo the politicians that depend on their votes, have that they’re entitled to these jobs as Americans. Protectionist bills like what the senate just passed enjoy wide populist support because we need to protect American jobs for Americans damn it! Well let’s look at one simple statistic:
Average manufacturing job hourly wage
(Source: Time Magazine)
On average you can hire seven Chinese workers for the price of one American. I’m a proud American, but if one of us loses a job to seven Chinese, I don’t see much problem with that; especially when you consider a few other things.
That average Chinese worker making $3.10 an hour probably didn’t just waltz over to the local car factory. Odds are she left her entire family behind to work in a distant manufacturing hub like Dongguan or Wenzhou where she lives in a dorm and sends the bulk of her paycheck back home to support her child and parents, whom she’ll be lucky to see once a year.
She might work 10-12 hours each day, maybe taking only one day off per month. Say what you will about human rights, but this is usually by choice. If she’s already this far away from home, there’s no sense wasting time. She wants to work as much as possible. So she’s happy to ignore overtime regulations if it results in more hours. And she’s very grateful for this job. It gives her far better prospects than she’d have back home.
(Read: Factory Girls by Leslie Chang. An excellent chronicle of the lives of Chinese factory workers)
This doesn’t just apply to factory workers. Ask a random waitress or cleaning lady in a big city like Beijing. Chances are they’re not from Beijing and they have a similar situation to the factory worker. How many laid-off Ohio workers do you imagine would be willing to leave their family behind and move to Florida to live in a dorm and work at a waitressing job?
You can point to abusive working conditions, defective products or intellectual property theft. These things certainly exist, but they’re more a shameless excuse for protectionism than they are a significant detriment to America’s economy. They’re no justification for boxing out all Chinese manufacturers. And yes, China manipulates its currency, but it has appreciated 20% since 2005. And no matter how much it appreciates, it won’t even out the mammoth manufacturing cost imbalance.
In the latest Republican debate Honeywell CEO David Cote pointed out that, “Twenty years ago there were a billion people actively participating in the global economy. Today there are more than four billion active participants in the global economy, with China, India, former CIS states and other emerging economies now in the game. While that is a good and peaceful phenomenon, it also means we need to compete more strongly than we did in the past.”
People like Mitt Romney are pushing the American victim of red China narrative because it’s what Americans want to hear. Telling them the truth would be political suicide; that their previous lifestyles were superficially inflated and that they need to brace for permanent sacrifice and dramatically lower their living expectations.
There are plenty of things the US government can do to make the country more competitive in education and clean energy that don’t need to resort to protectionism, but ultimately it’s on Americans to accept the tough reality of having to sacrifice more for less money. The global playing field is balancing out. For emerging economies like China’s, that means an upswing in quality of life. Unfortunately for the US, it means a fall down to the world mean. When viewed objectively, that’s not a bad thing.