Thursday, March 10, 2016

Rumination on Free Trade

There is much talk about the impact of "free trade" on our economy. Yes, it does result in cheaper manufactured goods from overseas. We experience this all the time at Walmart and Costco.

The other DrC likes to buy $5 t-shirts and toss them after a few wearings. I spend most of the year in polo shirts I've bought for roughly $10-12 each. If made in the U.S. they'd cost a lot more and we'd have fewer of them. All of us benefit from the lower prices low wage foreign labor makes possible.

On the other hand, the U.S. once had millions of people employed making things in factories. Factory work wasn't exciting or glamorous but it bought homes and cars and paid bills. Basically, it didn't require exceptional intellect, often a strong back or deft hands were enough.

Okay, we've sent those jobs overseas, but we couldn't send the people with the jobs. Not that they were willing to go, but doing so would have defeated the primary purpose of offshoring: cheap labor.

We still have the people who once would have held factory jobs but those jobs are gone. What is left for the typical former factory worker is a service job: gardener, waiter, beautician, pool boy, driver, retail associate, cashier, janitor, etc. These jobs are often less-than-full-time, have odd, split or rotating shifts, and don't pay nearly what manufacturing did.

Forced into less-stable, less-lucrative service jobs, people don't see enough income stream going forward to marry and establish a household. So families fall apart, or are never formed. The outfall from this effect includes substance abuse, delinquency, crime, and general societal deterioration.

So ... taking the pluses and minuses together, is free trade as currently practiced good? Probably not. As currently practiced, the U.S. engages in free trade while many of its trading partners do not. Thus we run a trade deficit most of the time, which economists argue is just foreigners being willing to lend us the money to buy their goods, enriching our lives. But at what cost in social degradation?