Exporting: Recapturing the American Dream?

 

One can only wonder in amazement at it all as over the last twenty years or so as we have exported millions upon millions of jobs of all sorts especially those middle income manufacturing jobs to lower price labor countries across the globe.  The Obama administration in its fervor to offset the tide of low cost imports, and promote American products has proclaimed that we will double our exports in the next five years. The reports have been very promising as we are clearly on our way to achieving the vision President Obama so clearly defined for us in March of 2009.  We are now in the second year of the program but just what is the cost of exporting our way back to the American dream?   

 One could say that in the larger scheme of the global supply chain, where richer industrialize countries like the United States, Germany, Italy, Japan, and others, that it is inevitable for countries with lower costs, well trained work forces will take over the manufacturing roles. First in that line were the Asian Tigers – like Taiwan, Singapore, Malaysia, Thailand and Korea that climbed up the global GDP ladder becoming very middle income by producing quality at value prices, then followed by China who has taken that model to a whole other level has shifted the balance of wealth generation as we know it.  In the wings, there are up and coming countries like Vietnam, Indonesia, Poland, India and Brazil where the CAGR has been around the low teens in some years. Fierce competitors in any sense of the word – so just what is it that America will do to compete against such hungry rivals for global trade dominance. 

Statistics from the US Commerce on what America really has that is still competitive is not surprisingly; the following categories where we are still very competitive are those industries where we have not traded off our technology and know-how.  Aircraft, agriculture, key minerals, specialized computer systems, medical systems and technology and of course education and Americana (McDonalds, Disney, KFC, Entertainment).   Our competitiveness remains solely in our ability to innovate, create premium products and services that command prices that will allow us to enjoy the comfortable lifestyles that as Americans we have come to expect. Yankee ingenuity and technology has always been our edge in business, culture, war and peace.  So the price for achieving the American Dream through export is that we must sell off technology and create new ones for sale? Or what is it?

In my zeal to understand the export model better, I looked at the wunderbar country – Germany who has exported its way to prosperity in this last global recession, who has actually grown their GDP while their neighbors suffered, whose unemployment remain well below the rest of Europe yet what was their price for growing their exports through the recession? An article by Peter Strauss, on the “FairyTale of Germany’s Miraculous Growth” stated that mainly German growth was due mainly to their exports to China, Brazil, and other developing economies whose appetite for all things German like autos, machinery and technology is almost insatiable.  While Germany recognizes that its exports to China are temporary as the Chinese are buying to engage, transfer technology and to learn so they can create their own competing industry, it is the deal they must make.

The current growth, however, has not been reflected in workers’ incomes or an increase in the number of jobs. The result is a general decline in wage levels that have contributed significantly to the current increase in exports. The growth has also driven an economic divide with its neighbors where inter European trade is flat as countries like France, Italy, and others lack the economy to trade.  And overall the labor unions have conceded to the corporations driving dissent between its members as skilled labor is stifled by low wages, and those non essential skills like security, cleaning, and others service have been outsourced to lower wage countries like the Czech Republic and Bulgaria where wages are less than a third of German wages.

So in our quest to recapture the American Dream through aggressive exporting, are we following the same model Germany has so unwittingly entered where they are trading their future by selling their technology, their know-how and the hard earned trust of its workers. Are we going to be better off even as our own exports double, triple, or quadruple if our workers will have to take further concessions in pay, benefits, training, and working conditions to provide high value services and products to emerging economies?  On a whole I believe that growing exports will enrich our country which is good to even out our trade deficits – my concern is that the export boom may not necessary help the “middle” recapture the American Dream where the next generation has the opportunity to live a better life than the last.