Free Marketing

There’s a bit of back and forth about free trade here, which seems to be centered around externalities. (Centered around externalities? Nu?) Guy A argues, well, sure Barbies are $2 cheaper, but a thousand guys are out of work and doomed to alcoholism and divorce (ok, not all). He doesn’t follow through with the thought, though. Are those the only implications?

I immediately wondered how many fewer Barbies were sold at 20% higher cost. And what happens, on a larger scale when, say, 20% fewer toys are sold. Do you get 20% fewer toyshops? Do you spread the formerly localized misery around throughout the supply chain, down to 20% fewer little girls getting what they want for Christmas?

Guy B argues, but what about the Chinese, now saved from alcoholism and divorce? Also, he goes to the root issue about using force and the implications of allowing the government to, essentially, make business decisions for people.

But when you start with protectionism, you have to assume the people you’re arguing with are taking the position that, yeah, it is okay for the “greater good”.

You know, the heartless businessman is such an accepted trope, I bet nobody has ever even tried to tackle the reality. It’s just taken for granted that businessmen will save that $2 and lay off their workers, which doesn’t really match what I’ve seen. Most of the businessmen I’ve known really loathe laying off people, especially good people.

Anyway, as someone whose field went from esoteric to hot to increasingly downgraded and outsourced–all without ever being really understood–I’m inclined to wonder if the damaging thing is the idea that a Man Can Only Do One Job In His Life and a Company Must Take Care Of Him.

Protectionism is, at its best, an attempt to preserve that notion. We’re still serfs serving feudal lords, in that view, though at least we have some mobility. At its worst, protectionism is a tax on the populous to ensure the wealth of the entitled. Someone decides some occuptation is entitled–say, corn farmer–and so we all pay more for sugar and can’t get a decent soda any more.

Of course, the educational system was set up to provide exactly this kind of worker: Someone who’d take orders and sit still and do things by rote all day. As it turns out, this 19th century “ideal” isn’t the best approach for survival in the 21st century, though our schools don’t reflect that.

But it’s easy for me to take this tack, as a guy whose resumé qualifies as ridiculous in terms of the various things I’ve worked with, and who picks up new things pretty aggressively. (I sort of have to do that, because the more logical and robust approach–building a business and customer network–is not something I’m good at.) It’s more interesting to look at whether it’s ever neccessary for industry to be protected.

Consider, in a truly free trade system, that a foreign supplier can flood a zone with cheap goods at a loss and drive local suppliers out of business. And having established a monopoly, they can raise prices again. This is a gag pulled by big companies, not just foreign ones, and it does raise some thorny issues.

But I do note that these thorny issues can be resolved with flexibility, agility and mobility, given the right technology. If local suppliers can’t compete with larger ones when they cheat, then you bring in more of the larger suppliers to keep each other honest. And if the local suppliers still can’t compete in that arena, you move them to a different one. If you’ve got 1,000 people making Barbies, maybe you split them up into 10 groups of 100, all able to act indepedently and fill demands at a level a foreign supplier can’t.

With heavy-duty industrial stuff, that’s not possible–yet. But perhaps it will be. I’m biased, due to being heavily involved in computers over the years, but I see high-tech electronics not being all that different from 19th century tech, only much, much faster. And it seems like that high-tech stuff infringes more and more on clunky ol’ steam-era tech.

But regardless where technology takes us, businesses and their employees are always going to be served by being able to shift gears and change directions.

(Original article tweeted by Freeman Hunt, who has some cool 60-year-old pix up on her blog now.)

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