Tuesday, June 14, 2005

Is Wal-Mart exporting jobs?

I just watched a Frontline episode about Wal-Mart that suggested the company is forcing companies to manufacture in China. It's a complicated issue but one comparison the show made is clearly faulty. The focused on a town in Ohio that used to be home to a television parts manufacturer that was forced to close because of Chinese price competition. Meanwhile, a Wal-Mart opened up. Obviously the Wal-Mart jobs paid much less and offered none of the benefits of the manufacturing jobs. It would clearly be a huge step down for those people.

But why would anyone make that transition, except to stay in their hometown? In contrast, millions of Chinese workers are leaving their agricultural communities to the new industrial cities on the coast in order to get better jobs. They make nothing compared to what they could make here, but substantially better than what they could do at home. This is the same process America went through nearly two hundred years ago.

I imagine most people who lost jobs to China found equivalent or better jobs, or just went into retirement. They might have moved, or pursued more education, or done something less interesting, but I'd be surprised if too many had to work at Wal-Mart. The contrast is stark, but not really meaningful.

The real irony is that people who buy cheap, Chinese-made TVs from Wal-Mart can spend more money on other things, like contributing to PBS programming. It's a bit of a stretch, I suppose. On the other hand, we bought our TV at Wal-Mart and this summer we started a Netflix subscription so that we'll have something to watch on it. Other people pay for cable and buy TiVos, or but DVDs at Wal-Mart. Surely some of our collective disposable income is creating jobs in the US.

And it's not like stopping Wal-Mart would keep the high-paying manufacturing jobs here. Wal-Mart's an easy target, but every retailer is involved with cutting costs by importing from China. The real problem, if there is one, is that Americans have gotten used to the idea that full employment is it's own goal. Franklin Roosevelt said it best: "No Country, however rich, can afford the waste of its human resources. Demoralization caused by vast unemployment is our greatest extravagance. Morally, it is the greatest menace to our social order." If you focus on the last sentence, employment seems to be a birthright, but the first sentence makes clear the productivity cost of unemployment. If the Chinese can make TV parts cheaper and better than we can, we need to find ways to be more productive.

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