Some ideas compel parody. The recent suggestion by the Ford Motor Co. to restrict Japanese car imports -- a proposal heartily endorsed by the United Auto Workers -- struck us just that way. And nothing would be easier. We'd invite Ed McMahon, the announcer who does Ford's commercials, into our column and engage in a bit of self-serving dialogue. It would go like this:
Us: Glad you could join us, Ed, for our weekly talk show on the economy. What's new at Ford?
McMahon: Well, as you know, Ford wants to be your car company. We've had our problems recently. The North American division actually lost money last year. But Ford still wants to be your car company.
Us: How do you and Henry intend to do that, Ed?
McMahon: Competition is old-fashioned, out-of-date. Ford has a better idea. We're going to pass a law hindering people from buying other companies' cars. First, limit Japanese imports. Next, make the Japanese build factories here.
Us: Won't that drive car prices up?
McMahon: That's the idea. As you know, most of the car slump is in bigger models, which the Japanese don't make. But all those small Japanese cars force us to keep our own profit margins down on small cars, and that's where the big market will be in the 1980s. Our labor rates are higher than Japan's, and their workers probably work harder. That's why we'd like themin the United States, where they can pay more for less.
This kind of writing is fun: it gets the juices going. But we're going to abstain from further journalistic self-indulgence. The Ford proposal deserves more serious treatment because it symbolizes something more significant than just another dose of trade protectionism.
More and more, it's economic isolationism. A vague feeling now exists that the less we have to do with the rest of the world, the better. The rough idea is to become stronger militarily and more self-sufficient economically. Anything that improves our insulation seems increasingly attractive. Ford's plan is but one of the legislative proposals to favor domestic over foreign production; suggested subsidies for small refineries synthetic fuels and gasohol -- turning grain into fuel -- are only some of the most prominent.
All these schemes differ in detail, but they signify a shift in the domestic political climate with possibly profound implications. The dangers are clear enough. Protecting inefficient industries and resorting to increasingly heavy subsidies for fuel and other "essential" goods could turn the United States into one of the world's permanently high-cost economies. Rampant protectionism could fragment our overseas alliances. Only last month, U.S. Steel Corp. filed a massive "dumping" complaint against European steel producers. Further complaints against Japan and others could follow.
Possible side effects defy prediction. Consider Japan. It is the largest customer for U.S. farm goods, but if its steel and car exports are suppressed, can it sustain U.S. grain purchases? If not, pressure from farmers to turn more grain into fuel (and prop up grain prices) are bound to mount. Ecologist such as Lester R. Brown of the Worldwatch Institute see a larger moral issue in this trend: feeding cars instead of people.
But no one should deny the lure of the new isolationism. Vague as it is, this new ideology represents an understandable reaction to the growing intrusion of international events on the American economy. For years, these were minor and the United States played global preacher, moralizing against the sins of protectionism and economic nationalism. Now, we have joined the congregation and see that oil is only an extreme example of a general truism: once imports or exports capture a substantial part of an industry's sales, it loses its national autonomy.
About two-fifths of America's harvest goes abroad, and U.S. grain prices -- and, ultimately, meat prices -- depend heavily on world food conditions. About a fifth of U.S. steel and car sales are imports; that's large enough to put U.S. workers in direct competition with their overseas counterparts.
Americans are now painfully learning that world markets are inherently less stable -- and more competitive -- than national ones. Political upheavals can create havoc with prices and supplies: witness oil. Natural calamities can do the same: witness grain. Export and import volumes can swing unpredictably: witness everything from shoes to nuclear reactors.
Who can deny the appeal of insulating the United States from this turbulence? We are loathe to let other countries dictate our living conditions, and yet that seems to be the threat. Many of our best-paid manufacturing workers (autos and steel again) are in relatively low-skill jobs. Workers in less developed countries can do these jobs for much less, and possibly with more zeal, because they appreciate the work and have weaker unions (or none at all) to protect them.
If all this seems to imply an economic version of the America First Committee, you have to wonder: if Americans aren't for America first, who will be? Good question.
But the question that needs to be asked simultaneously is whether the proposals that parade under this banner really put all Americans first -- or just some. The Ford and UAW import restrictions are self-serving in the extreme. Ironically, higher car prices would probably slow the shift to more fuel-efficient vehicles, exaggerating the national dependance on imported oil.
There are limits to the threats of low foreign labor costs and other associated economic "advantages;" more lax environmental or safety regulations. Transportation to the United States provides one cost cushion (it adds about 10 per cent for steel), and traditionally-high U.S. productivity has constituted another. The ailments of the auto and steel industries stem largely from runaway labor costs (which have advanced much more rapidly than average) and special problems: the dramatic shift to smaller cars for autos and obsolete plants for steel.
We are going to face this issue again and again in the 1980s: what is to be our political response to global economic change? The possibility is real that all nations, scrambling to protect their individual interests, will make things worse for everyone. And, like it or not, the United States does have a leadership role to play. No one wants to trust unreliable foreign markets for essential goods, but we need to be clear-headed about what is a genuine threat to national security and what is simply clever sloganeering.