THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Sunday, September 29, 1996 TAG: 9609270711
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY LON WAGNER, STAFF WRITER
LENGTH: 80 lines
Want to pay more for your clothes? Want to work in a broom factory? Want to drive a car that breaks down a lot?
That would be the price for restricting free trade. And that seems to be the point Philadelphia Inquirer reporters Donald L. Barlett and James B. Steele miss in their series, ``Who Killed the America Dream.''
The series, which ran in The Virginian-Pilot last week and concludes today, may have hit a nerve with the average worker. But among economists it has struck a different cord.
Most disturbing is Barlett and Steele's contention that international trade barriers would prevent jobs from going overseas and would somehow improve the overall U.S. economy.
``We get to consume goods that otherwise wouldn't be available to us at the quality and price that we're able to pay,'' says John Whaley, director of economic services at the Hampton Roads Planning District Commission. ``There would be a price to pay if we were to erect barriers to international trade.''
Literally.
Whaley points out that a good, white, foreign-made dress shirt sells in Hampton Roads for about $20. It would cost 30 percent or more higher if it were made in America, Whaley estimates.
The ``American Dream'' series challenges one of the bedrocks of economics: the theory of comparative advantage. The idea is that each country has unique economic strengths - natural resources, location, skills of its workers - that make it better than any other country at producing certain goods.
So each country should focus on the handful of industries in which it has a ``comparative advantage'' and trade for the goods that it cannot make as efficiently. The United States, for instance, has some of the best farmland and agricultural techniques in the world.
Comparative advantage and free trade have become so well accepted among economists that they are hardly considered ``theories'' anymore. They are facts.
``You're going to be hard-pressed to find somebody who disagrees with free trade, outside of newspaper reporters and Pat Buchanan'' says Gilbert Yochum, chairman of the Department of Economics at Old Dominion University.
Now, Yochum admits, free trade doesn't always translate to fair trade. Japan's trade barriers are famous. And U.S. apparel manufacturers are hard-pressed to compete with Central American sweatshops that employ child labor - other than to employ child labor themselves.
But the experts challenge other areas of the Barlett and Steele's work. Though they don't dispute the brutality of economic change, economists say the U.S. economy is the envy of the world for its job creation.
David Garraty, an economic professor at Virginia Wesleyan College, was one of several economists to point out that anecdotes of those who have lost jobs are easier to find and understand than the complex benefits of encouraging free trade. In other words, a story about a family devastated by job loss is more interesting than one about a guy who gets a good deal on a shirt.
They also say the series focuses unfairly on the loss of unskilled labor jobs.
``The U.S. is far and away the greatest economy in the world,'' Yochum says. ``Not only that, but the groundwork has been laid for us to remain that way for the foreseeable future.''
Steve Golub, an economics professor at Swarthmore College in the Philadelphia area, says he fired off a letter to the Philadelphia Inquirer objecting to some of the premises of the series.
The U.S. economy has created 10 million jobs since 1993, he says, and more than half of those pay well. Unemployment is at its lowest since 1973.
``There's been this tremendous amount of job creation,'' Golub says, ``and it's not just hamburger flipping. A lot of people think steel and autos are manufacturing - there's a lot more to it.''
Imports from low-wage countries amount to only 3 percent of this country's gross domestic product, and exports to low-wage countries amount to 2 percent, he says. So in many cases, the low-wage countries use the dollars they make from exporting to the United States to turn around and buy our products.
The United States dominates vital industries such as manufacturing aircraft and machinery, agriculture, higher education, medicine, finance, telecommunications and software, Golub says.
One point of the Barlett and Steele series with which Golub agrees is that the United States should do a better job of retraining its dislocated workers and find a way for them to have continuing health insurance.
``I do think we ought to be a little more like Europe in cushioning the blows for the losers,'' Golub says. by CNB