There is another vision for life in America. It is one in which the cascading effects of the low price, low wage economy and its vicious circle spiraling downward in a race to the bottom is replaced with a different cascade creating a “virtuous circle.” It is a vision some commentators have referred to as the “high road economy.” It is not new; it is the vision that gave us the Golden Age of 1947-1974, and created the American consumer-led economy in which economic gains were widely shared. The cascading effects now look like this:
Robust Labor Market
In a growing economy, there is strong demand by employers for employees to fill a wide range of roles in producing more goods and services.
Full Employment and Use of Skills, Living Wage
With strong demand for employees, the potential workforce is fully utilized, in both numbers, and in training, education, and skills sets. Efficient “job match” can be achieved, and the full potential of individuals realized.
The “working poor” becomes a thing of the past, because in return for an honest day’s hard work, an employee receives a living wage, a wage at which life “adds up.” In this way, work is honored, and work has dignity. As more jobs provide family-sustaining pay and benefits, workers can make ends meet, and households can be independent -- not reliant on a benefit, subsidy or income transfer -- and in fact able to make their own contribution through the payment of taxes.
A living wage can be paid because economic gains, including gains achieved from increased productivity, are broadly shared, as they were in the past.
Independence and Social Health
Individuals, families, and communities all become healthier, as negatives become positives:
Robust Consumer Demand
Individuals and households who are “making a go of it” are out in the market, spending their earnings on goods and services comprising some 70% of Gross Domestic Product.
The robust demand for goods and services by consumers drives economic growth. A growing economy generates jobs, leading to a robust labor market, and the cascade becomes a repeating, virtuous circle:
The virtuous circle leads to a building up, instead of a hollowing out, of the middle class.
There is also a better vision with respect to America’s trade policy.
For our trading partners:
The World Trade Organization and other organizations and academia refer to countries as “trade partners” vis-à-vis each other. In theory, the term is apt, as it implies a mutuality of benefits and obligations, that each “partner” has a responsibility to manage the relationship for mutual benefit.
However, as we have seen, many trading nations act like anything but “partners.” Instead, they adopt mercantilist, export-oriented policies designed to maximize their exploitation of the “partner” country’s market (read United States), through planning, subsidies, and other forms of “state capitalism,” and to minimize the “partner” country’s penetration of their own market, through formal and informal barriers to entry and manipulation of currency relationships and abuse of international trade dispute resolution mechanisms.
At the end of the day, each trading partner has a duty to assure that the relationship does not get, or remain, out of balance. This is true even of trading partners such as Germany and Canada, who may not be engaging in the more egregious means of abusing the trade relationship, but who are running persistent large trade deficits with the U.S. nevertheless.
So, the vision includes a trading environment where trade partners act like partners and keep their trade in balance, ensuring that trade is, as some theorists have hoped, a win-win for all involved.
To U.S. companies establishing a presence in China and other countries, we say, all well and good, so long as your presence there is not siphoning off capital investment that could be going into the U.S., and so long as you are not supplying your foreign hosts with technology they will use to create competing products, and so long as whatever you make there, you sell there, and not back into the U.S. market.
The vision includes U.S. companies behaving like good corporate citizens, who do not exploit the U.S. market with goods they make abroad, at the expense of U.S. workers, families and communities.
May 15, 2014, Ontario, CA - MIAA's founder, Jim Stuber, delivered the keynote address at the 20th annual World Trade Conference sponsored by the U.S. Department of Commerce and the California Inland Empire District Export Council in Ontario, California. To view the conference agenda, click here:
May 7, 2015, Radnor, PA. MIAA's founder, Jim Stuber, appeared as the guest of host Richard J. Anthony, Sr. on The Entrepreneur's Network TV at Radnor Studio 21. The program featured a discussion of the problems caused by offshoring manufacturing and white collar jobs and how consmers can solve the problem with their spending decisions.
Studio 21 has made the program available for viewing here: