Mar

11

 Don Boudreaux's letter to the Wall Street Journal reminded me of the wider benefits of trade. I noticed today the label on a reasonably nice bath towel from Target ($1.50). It was made in Vietnam, of all places. Johan Norberg, in his book, In Defense of Global Capitalism (and his excellent Globalisation is Good documentary), starts in Sweden then visits Vietnam, along with Taiwan, interviewing workers whose stories give solid evidence of the benefits of international trade and investment.

Elderly Taiwanese multimillionaires discuss the early sweatshops of the 1950s, and comment that machinery was less safe then (they show their fingers missing digits as evidence). In Vietnam Norberg visits a Nike factory with workers both pleased and getting wealthier. The only complaints come from Nike managers irritated their skilled employees are being hired away by other firms for higher wages.

Somewhere in Vietnam is the textile factory where my Target towel was made. Someone got up that day and rode to work by bicycle or car to labor on my towel along with hundreds or thousands of others before returning home. Instead of following the communist ideas forced on their parents, Vietnamese people today enjoy the fruits of capitalism and economic freedom.

Similar thoughts cross the minds of millions of Americans when the notice their clothing, towel, and bed sheet labels. Much is from China (but where in China?), but much comes from mystery countries few of us know much about. Each label serves to prove gains from trade. Somewhere far away someone made this thing. And it traveled the world to give comfort and warmth. Maybe this is why most Americans seem more comfortable with international trade and globalization. Not the media pundits of course, but everyday people. The hysterical anti-globalization campaigns of the 1990s have faded.

I think textile unions and Congress helped change public opinion in favor of free trade. Unintentionally, of course.

Legislation empowered the Federal Trade Commission to mandate U.S. content and country-of-origin labels for textiles and cars: "Title 16, Chapter I, Section 303.33 (a)(1) Each imported textile fiber product shall be labeled with the name of the country where such imported product was processed or manufactured."

U.S. textile companies and unions lobbied for legislation to force importers and retailers to reveal the country of origin (the legislation applies only to textiles and cars). Most people don't really care where their clothes are made, of course. They care about quality, feel, design, and comfort of clothing, sheets, towels, etc.

Maybe unions and U.S. textile producers thought Americans would shun foreign clothing. Instead, each time Americans found an unexpectedly good deal for comfortable clothing, it was tagged with the name of a distant and mysterious land. Most of us have been amazed to discover nice clothing labeled from Jordan, Bangladesh, Vietnam, and a dozen other countries we never thought of as producing and exporting quality clothing.

And for all the negative things politicians and pundits might say about China, most American only gain from quality goods from China. (Had FTC rules forced firms to reveal the Chinese province of origin, we would likely know more now about Chinese geography).

Years ago The Freeman published a great Frank Chodorov article titled "The Humanity of Trade." Trade has a powerful civilizing force, and goods from far away lands lead most to wonder about people and places far beyond their everyday horizons.

The trade deficit figures that pundits and politicians regularly report are misleading in more ways than one. Trade serves as a conduit for ideas as well as for goods and services. Observes Chodorov:

"We think of trade as the barter of tangible things simply because that is obvious. But a correlative of the exchange of things is the exchange of ideas, of the knowledge and cultural accumulations of the parties to the transaction. In fact, embodied in the goods is the intelligence of the producers; the excellent woolens imported from England carry evidence of thought that has been given to the art of weaving [woolen goods are covered by separate FTC regulations…], and Japanese silks arouse curiosity as to the ideas that went into their fabrication [silk enjoys much lower tariffs, by the way]. We acquire knowledge of people through the goods we get from them. Aside from that correlative of trade, there is the fact that trading involves human contacts; and when humans meet, either physically or by means of communication, ideas are exchanged. 'Visiting' is the oil that lubricates every market place operation."

So it is, I think, that Congress has accidentally accomplished a good deed in forcing firms to label clothing, towels, and sheets with their country of origin. Every day and night we walk and sleep in greater comfort thanks to workers in faraway places. Each time we notice a tag with the name of some distant land, we momentarily reflect, wonder, and appreciate.

The long upward swing of the stock market reflects not only amazing technological advances deployed throughout the economy, but also the billions of people newly welcomed to the world of capitalism and freer trade. Returns to capital rise with its increasing scarcity relative to labor (as others have pointed out). Hundreds of millions are newly free to work with the tools and machinery long denied them by their governments. From China and Vietnam to India and Eastern Europe, the decades since the fall of communism have allowed capital to seep steadily and intelligently into impoverished and once controlled lands.

The scope of world trade is rapidly expanding and along with it new gains from the division of labor. And this process is just starting. How many hundreds of millions (or billions?) still plant crops by hand and for capital have recourse to only ox and plow?


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