What are they running from?

Aug. 21, 2007
In the course of an e-mail exchange, something clicked: "These people within the WTO are not ignorant," wrote my correspondent, who had contacted me for more detail about something I'd posted online. He continued: "They seem to have the right ...

In the course of an e-mail exchange, something clicked: "These people within the WTO are not ignorant," wrote my correspondent, who had contacted me for more detail about something I'd posted online. He continued: "They seem to have the right backgrounds. Yet it does seem as if the game plan is to ‘race to the bottom' … A term I have heard a lot." "Me, too," I thought. Later, I heard a radio ad turn the same phrase. Then, it started to pop out of all sorts of things I had been reading.

The Race to the Bottom, I learned, is the title of a book by Alan Tonelson, who I already recognized as a proponent of the increasingly common belief that U.S. manufacturing industries are being unfairly challenged by foreign competition. His book is a detailed critique of globalization, specifically of the way it marginalizes national interests in favor of multinational ones, and how in this process labor costs are driven downward because advances in information technology and logistics overcome the advantages of a skilled workforce.

The loss of that advantage puts everything into a new competitive frame, wherein cost-cutting becomes the only effective strategy — but also a vicious cycle that cannot be reversed.

Many subscribers to the "race to the bottom" outlook go further: they contend that there are "powerful multinational interests" conspiring with federal officials to subvert our national economic strength.

Tonelson may have coined the phrase, but he's not alone in the movement. CNN's Lou Dobbs is its celebrity face: fed up, often sarcastic, and impatient with anyone suggesting free-trade principles must be upheld. Some trade associations and ad hoc groups have been effective at organizing and lobbying to spread the message — such The Tooling, Manufacturing & Technologies Assn. (the renamed Michigan Tooling Assn.), which is leading a revolt against the National Manufacturing Assn., because the latter is too beholden to multinational interests.

Their agenda, presently, is for the U.S. Congress to pass the Currency Reform Fair Trade Act of 2007, which would compel the Treasury Dept. to punish China for its policy of undervaluing its own currency. That policy makes China an exporting powerhouse, and the holder of much of our national debt. The 2007 bill, however, is just a building block for a wider agenda for overhauling U.S. trade laws.

The movement gets intellectual heft from an economist named Ralph Gomery, who is president of the Alfred P. Sloan Foundation, and a proponent of the idea that free trade and open markets — really, two of the foundation stones of capitalism — make us vulnerable in the modern world.

All of this is too much for me. I don't fault the proponents for their passion, nor do I quibble with the facts that have them so outraged. But, all of it has been triggered by the economic challenges that flow from competition — global competition. The movement is driven by anger and frustration, and in some instances by political opportunism.

As a political movement, it is short on principles — other than a vague dedication to "fairness." As an economic movement, it proceeds from an assumption that resources (natural, financial, human) are limited. In contrast, it is a capitalist axiom that resource advantages and human decisions cannot overtake the power of the market to reward performance with success. So, the economy is always shifting, but it never "ends." Characterizing it as a "race" seriously contradicts what actually is happening.

Before China, the villain was Mexico,, and before then it was Japan. China's size and the speed of modern life may make today's problems seem more acute, or more personal. But, the "race to the bottom" believers should review economic history prior to the 1990s; until the emergence of globalization, their ideas were known as "protectionism." Much of the 20th Century demonstrated how tariff manipulation leads to other measures that result in expanding government regulation and ill-considered industrial policies, and the inevitable loss of consumer and individual freedom.

I, too, am outraged by the spectacle of China's economic expansion, but it's because what China is doing is an amped-up version of protectionism. Manipulating markets, denying consumer and individual rights, elevating some interests over others — relying on corrupt "policies," not principles. We need for China to become more like us, not to make the U.S. more like China.

About the Author

Robert Brooks | Content Director

Robert Brooks has been a business-to-business reporter, writer, editor, and columnist for more than 20 years, specializing in the primary metal and basic manufacturing industries. His work has covered a wide range of topics, including process technology, resource development, material selection, product design, workforce development, and industrial market strategies, among others. Currently, he specializes in subjects related to metal component and product design, development, and manufacturing — including castings, forgings, machined parts, and fabrications.

Brooks is a graduate of Kenyon College (B.A. English, Political Science) and Emory University (M.A. English.)