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What Else is There Left to Defend?
By David Glenn Cox
Tim Keller is a man with an idea; Keller founded VinPerfect in his basement office not far from the University of California Davis campus. After earning his masters degree in business from UC Davis in 2008 and after twelve years in the winery business Keller thinks that he’s struck gold with an improved, high tech seal for screw caps on wine bottles.
The market for screw caps and corks is a huge one. Keller’s idea is an improved seal made from a perforated polyethylene foam. To attach the seal it must be heated which generates polyethylene emissions. Sounds lovely, doesn’t it? Garcon! Unscrew me a bottle of your best stuff from '09. All kidding aside, Keller’s idea is an attempt to take the screw cap industry upscale.
Sadly, for all his love of California and its wines and its great educational system, Keller fears the heavy hand of government crushing his entrepreneurial spirit. Polyethylene produces what are known as (VOC) volatile organic compounds. These include methane and formaldehyde, which can affect the environment and human health, especially if used indoors. Because of the health effects and environmental affects, VOCs are regulated in some places, and California is one of those places.
Tim thinks that because the heavy hand of government wishes to protect workers and the environment that he will outsource production to China. "Feeding my family is still higher on the food chain than employing Californians," said Keller, 34, the father of a 2-year-old.
Keller worries the state's environmental laws mean he "can't have a business or be competitive."
Bottle cap manufacturing is largely an automated business; workers load machines and the machines stamp out bottle caps. Tim considers himself an environmentalist, too, much like Exxon Mobil who has never seen a sunset that wouldn’t look prettier with an oil derrick in it. Tim loves California’s environment, until it interferes with his moneymaking plans.
He loves his neighborhood with its streetlights and well-paved streets and good schools for his son to attend. He likes living in a country where people can afford an overpriced bottle of aged grape juice and where someday he might be able to send his son to a world class public university where maybe he’ll get a degree in business and learn to export jobs, too.
Tim’s not a bad guy; Tim is just over-educated and under-smart. One of the first books I ever read in first grade was a book called, “What if Everybody Did?” It gave examples of what would happen if everyone forgot to turn the water off or squeezed the cat. If Tim had read this book he would ask himself, “Who will buy this wine if everyone sends their jobs overseas?” What if everybody did?
But everybody already did! Textiles, computers, engines, electric motors, you name it.
Tim’s friends warned him about the high cost of doing business in California with its taxes and regulations, minimum wage laws, workman’s compensation; it is all too daunting.
Globalization is like a drug. When American workers must compete with workers making $3.00 a day, managers and manufactures know that it's wrong but the lure is almost irresistible. Without those pesky environmental laws, even barrels for collecting toxic waste become too expensive. Just dump it out the back door.
About a year ago I wrote about a blue jean manufacturer that had moved to Mexico in search of lower wages and looser environmental standards. The plant created four hundred jobs and the local villagers were happy until people in the village started to become ill. Dyes and solvents released by the blue jean factory had poisoned the ground water and in doing so a village of fourteen hundred people no longer had a safe source of drinking water. They also had no source of water for their gardens as federal inspectors advised against using the water to irrigate crops. It put the local farmers out of work, as well.
I wonder what Tim will do if, after he’s sold his first half million screw caps, stories about tainted wine begin to come across Tim’s desk. Class action law suits over toxic Chinese drywall, lawsuits over contaminated infant baby formula and poison wheat gluten have no impact on Tim because all he sees is the initial cost and the bottom line. He trusts that nothing bad will happen he knows that regulations are paper thin and mostly for show. He wants all the good things that California and the United States can offer; he just doesn’t want to pay for them.
I read about Tim’s story in the newspaper and it was couched in all the usual Republican arguments, all about how Tim would like to bring jobs to Californians but the cost of business is just too high. That’s where they are wrong. The cost of business in California is where it should be; the cost of doing business in China is too low. Most Chinese outside of large cities draw their water from a communal well, many of the roads aren’t paved and industrial workers earn around twenty dollars a week.
Air pollution in Beijing is so thick that it must be combed out of your hair. Quality and environmental control are so lax that worker deaths are not uncommon and product recalls are common. It’s the Wild West of Capitalism and the sheriff works for the government, not for the consumer. Is that how Tim wants his two-year-old to live? In a filthy polluted world where workers live twenty to a dormitory shack and work six days a week for twelve hours a day?
Probably the biggest outright lie told about globalization is that everyone is doing it. The argument is framed that if everyone is doing it then it's inevitable and can’t be helped.
Germany, with an export economy of $1.121 trillion, exports everything from automobiles to electricity and 40 percent of its exports are with European economies with similar wage, environmental and safety standards. When you include the United States and Canada the figure goes over 50 percent.
Forty percent of Germany’s imports come from countries in the European Union. Only 4 percent of Germany’s imports head to China and only 8 percent of imports are from China.
In France the numbers are even clearer; 51 percent of all French exports are with European Union countries and when the US is included the number is almost 60 percent. French imports from European Union countries and the United States is 61 percent of the total.
In the United States our three largest export partners are Canada 20 percent, Mexico 11.7 percent and China 5.5 percent. We export agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0%. That all sounds good until you realize that China accounts for 16 percent of all of our imports or more then three times the amount we sent to them.
Mexico is another story; 80 percent of Mexico’s exports are to the United States, 3.6 percent of her exports are to Canada and Mexico’s next largest trading partner is Germany at 1.4 percent. Forty-eight percent of Mexico’s imports are from the United States, China 13.5 percent, Japan 4.8 percent, South Korea 4.6 percent and Germany at 4.1 percent. If you add those numbers up it comes to 75 percent, or only 5 percent of exports from Mexico to the US are actually from Mexico.
The United States exports raw materials and imports finished goods and only one of our three largest trading partners has a similar economy. Two of the three have workers who toil for between two to five dollars a day. Can the United States ever compete on that level? Can we maintain safe drinking water or a decent educational system? Can we maintain an interstate highway system or a national defense? The answer is as obvious as the illness; free trade isn’t free. Free trade is about the exploitation of labor and the evasion of environment law.
This isn’t about xenophobia or trade barriers but about common sense and national quality of life standards. If, as a nation, we won’t defend our standard of living and the opportunity for Americans to earn a decent living, what else is there left to defend?
“One other objective closely related to the problem of selling American products is to provide a tariff policy based upon economic common sense rather than upon politics, hot air, and pull.” Franklin Delano Roosevelt
A government that doesn’t defend its people isn’t worthy of being defended by its people.
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