When President Bush imposed tariffs on some imported steel in 2001, I was genuinely surprised. Given the neocons’ irrational lust for “free trade” to the point of allowing a number of other U.S. industries to be ravaged, it was extremely uncharacteristic for them to place any sort of levy on any import, most of which are cheaper and are hastening the destruction of other U.S. industries.
Bush said he made his decision to impose the tariffs for three years to help save the U.S. steel industry. True or not, it was heartening to see an American leader implement a distinctly Ameri-centric trade policy for a change.
But now that the tariffs have gone the way of virtually all other tariffs – the only federal government funding mechanism our founders envisioned – the steel industry is likely to lapse back into its moribund existence, hurrying toward death not by the “unfair trade practices” of overseas competitors, but by the crushing weight of labor costs.
What’s worse, the ungrateful slugs running the steelworkers unions who are already vowing to “get Bush” in 2004, despite his job-saving tariff assistance, will never agree to the kind of wage cuts necessary to compete with cheaper foreign steel.
It’s no secret, if you can understand “Business 101,” that the most expensive part of any American industry, firm, corporation or small business is the cost of its labor. It’s also no secret that America’s union labor is some of the most costly in the world. It’s this fact that has led the free-trade political establishment to essentially sell out its union constituencies in exchange for two things 1) more corporate donations; and 2) more corporate donations fed by cheaper labor costs after American firms move their operations overseas.
It might be hard to understand how American manufacturers can move their entire operation thousands of miles away, make the product, then ship it back here to the U.S. cheaper than making it domestically. It’s not hard to understand this formula when you realize foreign labor costs a fraction of what it does domestically.
It may not be fair to Americans who are watching their jobs flee to overseas markets. After all, is it our fault American workers need higher wages because it’s more expensive to live here?
In part, yes. That’s the other side to this economic equation. It is more expensive to live here because too many American workers demand too much money to do jobs that shouldn’t require a higher level of compensation. “Congressman” comes to mind, but that’s another story.
Consider this: Why wouldn’t GM, Ford or Chrysler want to build cars overseas when they only have to pay workers $8 an hour? Consider this as well: How hard would it be for U.S. car companies to fill positions at, say, $12 an hour, instead of the $20, $25, $30 an hour union autoworkers now make? And there’s this: Couldn’t an auto executive survive on, say, $200,000 a year instead $2 million? If execs don’t think so, let’s trade jobs – I’ll happily take the 200 grand.
Nobody wants a pay cut, but isn’t that preferable to losing your job for good? I think so, but few unions believe in that principle. They want all or nothing, and when they increasingly end up with nothing, they complain to the corporations they’ve been fleecing for years, or to the political leaders – many of them backed by their own unions – who agree to trade deals allowing their companies to escape to cheaper overseas labor markets.
President Bush made a political calculation in imposing tariffs on imported steel. For his trouble, the same unions he tried to help are now turning on him. This steely ungratefulness and inflexibility may play well in union halls, but it’s costing American workers their jobs.
There’s no question another crushing burden to American industry is the weight of needless, costly, bureaucratic regulations, many of which should be eliminated in an effort to increase U.S. competitiveness. While Americans press their lawmakers to focus on that goal, the only other meaningful way U.S. corporations can compete internationally in the meantime is to lower domestic labor costs. Like it or not, that’s a fact.
Unions, take heed: Your opposition to rational pay scales is self-destructive. The more you cost, the more your employers are going to look elsewhere for cheaper labor.