If a sweater made in the US sells for $85 at a downtown shop and a sweater of the same quality made overseas sells at JC Penney for $35,
almost everyone would spend the $35 to be equally warm and stylish for the
winter. It is a reasonable
decision. Your friends and neighbors
would likely not call you greedy, but would compliment you for being a smart shopper.
Perhaps a few of your more financially well-healed acquaintances might
tell you that you have an obligation to support the American workers by spending more downtown. That’s fine for those who can afford the
luxury of showing their patriotism by throwing away money, but most could use
that extra $45 to buy school supplies for the children or to spend on other needs.
What happens, though, when the sweater company that can
buy skills in the US for $25 per hour (including benefits) decides instead to buy skills of exactly the same quality overseas? It is accused of being greedy. It’s exactly the same behavior, but it is so easy to
represent this reasonable decision by a corporation as evil.
Those same well-healed critics may even start a campaign to boycott the
greedy sweater company or try to pressure the retailers not to do business with
them. A certain segment of the caring and compassionate public, always eager to show how
dedicated they are to concepts like social justice, buy in to the protest and
support it. It is particularly
frightening how easily a campaign like this can gain momentum if it pushes the
right emotional buttons and uses social media to spread the word, vilifying the target of
displeasure, in this case the sweater company or the retailer.
Who then suffers and who benefits?
Assuming the campaign is successful: the
sweater company may have to adjust their business practices or lose business
and the retailers may have to make similar adjustments. A few Americans may be hired, but higher
sweater prices will automatically reduce demand. Fewer sweaters will be sold because the
people who could afford only the less expensive sweaters will be forced to find
other options to stay warm in the winter.
The well-healed critics will feel smug, thinking they made the world a
better place, not caring how many ordinary people are now deprived of the
choice they once had. To do so they must trade off the school supplies to buy a sweater. No one will care how those people overseas who lost jobs will survive.
Ultimately, was this the right thing to do? The economic isolationists believe it is. Often, though, noble concepts such as compassion and social justice lure us into a simplistic misunderstanding of economics, and the outcomes are least just to those who are least well-off.
Another short thought - this one on perspective: Today the price of gasoline is between $2.50
and $3.00 per gallon in most parts of the US.
That seems high and people like to complain about it. Older folks
remember when it was 29.9 cents per gallon and you could easily refill the tank
for about $3.00! But that was back in
the 1960s when you could buy a nice car for about $3,000 and the median family
income was around $7,600. Today
(actually from 2013 US Census data) the median income is $52,300 and a nice car
still costs almost half that – but the new car gets about twice the miles per
gallon as we did back then. Perhaps it’s not as bad as we
think.
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