26 June 2012

An Invasion of Foreign Shoes

Below is a vignette from the Congressional Record, February 13, 1936, Senate floor debate, which I came across today in some research I am doing (yes, I love reading old Congressional Records, wonky enough?).

I thought it was worth sharing, as it helps to show that our political debates have, in some respects, changed very little over 80 years. Politicians (of both parties) have an impressive track record of repeatedly getting it wrong on manufacturing and productivity, and that includes those two guys at the top of this post.

Enjoy:
SENATOR ROBERT RICE REYNOLDS (D-NC, right). China is building its own textile plants. There are almost as many textile plants, as I observed only last December when I was there, in Bombay, India, as there are in Lancaster, England. There are 25 or more huge textile plants there. In China, with its 500,000,000 people; in India, with its 350,000,000 people; they have gotten wise to themselves, and they are establishing their own textile plants and growing their own cotton. It is a problem that we in the future shall have to confront, and in dealing with the problem pertaining to cotton I say we should not drive our friends from our doors.

SENATOR DAVID WALSH (D-MA, below). Mr. President, will the Senator yield?

Mr. REYNOLDS. I yield.

Mr. WALSH. Is it not true that the change which the Senator is describing as taking place throughout the countries of the world is applicable not only to textiles but to every other commodity?

Mr. REYNOLDS. Absolutely. I am glad the Senator from Massachusetts injected that statement at this time.

Mr. WALSH. And does not that mean that for the first time, or at least at the present time, we are confronted with the problem of demanding and insisting that the home market be retained and preserved for our manufacturers, when we are losing on all sides the foreign market?

Mr. REYNOLDS. The Senator is exactly correct. We are not only facing competition in textiles and shall have more competition in the future from all the countries in the world with which we have been dealing and from which we have extracted great sums but we are facing competition in every line of endeavor so far as manufacture is concerned.

Mr. WALSH. That is happening even in the case of boots and shoes, which were first manufactured in this country.

Mr. REYNOLDS. Yes; and they are now manufactured in large numbers in Czechoslovakia.

Mr. WALSH. The making of shoes has been a typical American development. We make the best shoes in the world. And now, as the Senator suggests, our shoe manufacturers are in competition with those of Czechoslovakia and other countries; our manufacturers are losing rapidly the foreign shoe market and are threatened with an invasion of foreign shoes.

Mr. REYNOLDS. The Senator is entirely correct.

Mr. WALSH. Another untoward situation that confronts the American producer is that machinery which we have perfected in this country, the best machinery in the world, is now available in every part of the world, and the people of other nations can use our machinery and produce as great a volume as we can at very much cheaper wages.

Mr. REYNOLDS. Because they pay to their laborers engaged in the manufacture of shoes and in other industries about one-tenth of what is paid the American laborer.

Mr. WALSH. Exactly. . .

Mr. REYNOLDS. . . . The great trouble that we are to meet, the great trouble that we shall be forced to face in this country sooner or later-and the time is almost here now-is how are we, under heaven, to be able to continue to maintain the high standards of living that we have maintained for the laboring men of this country?
I am pretty sure that the answer to this question, with the advantage of hindsight, has nothing to do with protecting cobblers from an invasion of foreign shoes.

9 comments:

  1. While it may sound like a load of cobblers, I'd suggest that they are more likely cordwainers.

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  2. Is the answer "innovation"? Is it also enforcing parity? If it is the latter, will we elect convergence to the least common denominator? Will it apply to nations, families, or, perhaps, individuals?

    I perceive the "progress" that you envision is to elevate all people, progressively. Unfortunately, this does not seem to be a universal qualification of that concept. There are factions which dream of instant gratification and grow evermore impatient.

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  3. How about something more than 150 years old.

    http://bastiat.org/en/petition.html

    You would think maybe we might learn something.

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  4. I would suggest that opening a restaurant chain with waitresses in gym shorts and shiny pantyhose isn't the answer either.

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  5. I would suggest that opening a restaurant chain with waitresses in gym shorts and shiny pantyhose isn't the answer either.

    Depends on the question!

    Given the success of such places, I would suggest that they are supplying someone's answers.

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  6. I don't understand.

    During the Carter era there was virtual hysteria about Japanese goods flooding America. Protectionism was always a major political issue in the USA. Britain has traditionally been the promoter of internationalism and free trade. having no regard to the welfare of its work force.

    The Council on Foreign Relations was originally a British attempt to push free trade on reluctant American politicians.

    **

    The Council on Foreign Relations, a sister organization to the Royal Institute of International Affairs in London (commonly known as Chatham House), was formed in 1922 as a noncommercial, nonpolitical organization supporting American foreign relations.

    http://en.wikipedia.org/wiki/Council_on_Foreign_Relations

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  7. Here is a wonderful article by Greg Palast in the Guardian. Many of us were aware of this at the time and saw the horror ahead. It is on topic because it deals with the removal of the ability of governments to protect their citizens.


    Robert Mundell, evil genius of the euro

    But Mundell, a can-do Canadian-American, intended to do something about it: come up with a weapon that would blow away government rules and labor regulations. (He really hated the union plumbers who charged a bundle to move his throne.)

    "It's very hard to fire workers in Europe," he complained. His answer: the euro.

    The euro would really do its work when crises hit, Mundell explained. Removing a government's control over currency would prevent nasty little elected officials from using Keynesian monetary and fiscal juice to pull a nation out of recession.

    "It puts monetary policy out of the reach of politicians," he said. "[And] without fiscal policy, the only way nations can keep jobs is by the competitive reduction of rules on business."

    He cited labor laws, environmental regulations and, of course, taxes. All would be flushed away by the euro. Democracy would not be allowed to interfere with the marketplace – or the plumbing.


    http://www.guardian.co.uk/commentisfree/2012/jun/26/robert-mundell-evil-genius-euro

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  8. The problem for countries and companies competing only on price advantage is that success will undo you (eventually). In a small country like Japan it only took a few decade for the prosperity from successful competition to eliminating the cost advantage. They focused on Demming's progressive refinement and quality to protect themselves somewhat, but the "lost decade" is becoming the "lost decades".

    For China and India, while they seem far deeper a sump for the prosperity effect, the pool of well educated is a much smaller fraction of the population and environmental and labor issues seem likely to catch up with China (at least) within a few decades.

    What *is* problematic is that for cost reasons, several generations of technology manufacturing technology doesn't exist in the US anymore. Even if the cost advantage were to disappear tomorrow, we still can't compete. http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=1&pagewanted=all

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