Or, Unmade in America
The United States is in a state of economic crisis. People are losing their jobs and can’t find new ones. People are losing their homes. Small businesses can no longer survive and have to close their doors. There is much discussion about the causes. There is even more discussion about the possible remedies.
There are many scapegoats in the current crisis: Wall Street, George W. Bush, Barak Obama, Congress, the media, the Democrats, the Republicans, a lack of regulation, too much regulation, Sean Hannity, Martha Stewart, Patrick Stewart, William Shatner… Pick your culprit.
I’d like to point the finger at a different set of perpetrators: You and me. The cause is something I call, the Walmart Mentality.
Here’s what happens: A new Walmart comes to town. A hundred people get new jobs. The people in town have been seeing the ads on TV for years, and now, it’s finally here! They can see what the hype is about. So as if as one, they go to the new store. They have TVs. They have microwave ovens. They have socks, and shirts, and paper towels, and sometimes even groceries. And everything costs less than what they used to cost in the stores in town.
Yeah, it’s hard to find a parking space. Yes, it takes 30 minutes to get through the checkout line. But we’re saving money! Sure, the people there with new jobs are earning low wages, many part time, with little or no benefits. But at least they have jobs, right?
Then business starts to drop off at the stores in town. How can they compete with Walmart’s prices? Even if they could, who’s coming to see them? Walmart already has everything. Who wants to make an extra trip to Main Street? So one by one, the stores start to close their doors. The people that work there lose their jobs. No problem. They can get jobs at Walmart. The turnover rate is so high, there are always jobs to be had at Walmart. Sure, the wages are lower, they may have fewer hours, with little or no benefits, but at least they have a job, right?
I’m sure at this point it seems like I’m picking on Walmart. I’m not. Walmart is used here as an example. As the world’s largest corporation, they are an easy target. And they are not without guilt in this story. But you can substitute any of the big box stores for Walmart in this story. As you will see, you may even be able to substitute any of the mom-and-pop stores still in business on Main Street. As I suggested above, the villains of this story are you and me. So let’s focus on me.
I decide that I need a new toaster. My toaster isn’t quite working right. The toast is either too light, or it’s burnt. Plus, I’m no longer content with toasting two slices at a time. I want one of those four slice toasters. So I do what anybody else would do, I head to Walmart.
I head to the store and after some jostling and exploration, I find the toasters. They don’t have a lot of options, but they do have a really hi-tech looking 4-slice toaster, just what I wanted. I look at the box, and I see a label I’m not really comfortable with: Made in China.
So I move on. The next toaster is even better. It will toast bagels! How cool is that? Then I look at the box. Made in China. Now I’m looking at all the boxes. Every single toaster. Made in China.
So I start looking through the rest of the store. Barbecues. Camping equipment. Tools. Clothing. Almost everything I find was made in China. I did find a shirt that was made in Vietnam. I even found some ketchup that was made in U.S.A.
Discouraged, I head to Main Street, where I’d heard the music years before. I went to the appliance store where we’d bought our vacuum cleaner and our sewing machine. Surely they would have the toaster I needed. Yes, they had a selection of toasters. But they weren’t much different than the ones I’d seen at Walmart. Every one: Made in China.
Desperate, I asked the owner of the store what was going on? He informed me that no one makes toasters in the United States anymore. It would make no sense, since it’s so much cheaper to make them in China. And even if they did, how could he afford to stock them? They’d be more expensive. How can he compete with the new Walmart if everything in his store is more expensive? He’d already had to let most of his employees go.
Reluctantly, I did what everyone else does. I bought a Chinese toaster.
How did this happen? It happened an inch at a time. There was a time when Sam Walton’s stores proudly sold American goods. Then a well-meaning US company discovered that they can make toasters for less by having them made in China, since they were paying the union-backed employees in Ohio $20 an hour, and the Chinese company that could make the toasters could pay their workers $20 a week. So a contract was signed, toasters were made, and after a two month journey on a slow boat from China, Chinese toasters went on display right next to their American made counterparts, but for $5 less.
Then well-meaning people like you and I marched into Walmart looking for a toaster. Seeing two toasters that look pretty much the same, we bought the one that was $5 less. We don’t care where it was made. We want to know, how much does it cost? And will it toast bread? We went across the strip mall to the Starbucks and congratulated ourselves on saving our family $5 while sipping on our $3 latte.
With the cheap toasters flying of the shelves, the manager at Walmart could no longer justify the shelf spaced used by the more expensive, slow moving American model. So it disappeared. You might be able to find it on their web site, but it will never darken the display shelf again.
So some American toaster makers began to suffer. With declining sales, they laid off workers, closed factories, and even went out of business. Others, doing what they felt they had to do to survive, moved their manufacturing operations to China too. They also had to close US factories and lay off those who had worked there.
This leads to another story that has happened over and over again. John had been working in a plant for twenty years, proudly making the appliances that brown our bread, open our cans, and blend our margaritas. He wasn’t rich, but he made a comfortable living and could afford to live in a home in a decent neighborhood with his wife and three kids. He didn’t love his job, but he took pride in the fact that he did it well. When he lost his job, he tried to find work elsewhere, but there was nothing to be found. Manufacturing was what most people did in his town. But all of the factories were closing. The skills he had that were once so important were no longer needed anywhere. He tried to sell his home before he defaulted on his mortgage, but with the industry disappearing in town, there was nobody in the market to buy. When he lost his home, he and his family moved 300 miles away where they could afford the rent on a two-bedroom apartment with bars on the windows and three locks on the door. At night, he drives a taxi. During the day he is paid $8 an hour to stand at the front of a store and say “Welcome to Walmart.”
So what’s happened here? Hundreds of thousands of Americans have lost good paying jobs. They are no longer paying income tax on the money they used to earn. They can no longer afford what they used to, so the restaurants, retailers, and professionals that used to have their patronage are also paying less income tax. The jobs that are disappearing the fastest are the union jobs with the nice benefit packages. The jobs they are being replaced with are often part-time, low wage jobs with no health insurance. So now Congress has to save the day by passing a bill that no one understands to make sure everybody has health insurance. John still can’t afford health insurance, but now he’ll have an extra tax bill since he can’t.
But I saved $5.
In 2006 Walmart hired a research firm to find out how much money they were saving us. The study found that Walmart’s lower prices had saved $957 per person. Per person! That sounds great, doesn’t it? Our current national debt is $30,400 per person. That’s money that you and I and our children and their children will have to pay back. In the meantime, our tax dollars are paying the interest on that debt. Who are we paying that interest to? More than half of the debt is held by other countries. For example, we owe $800 billion to the central bank of China.
What have we got for our money? The products we buy are lower quality. We no longer have anybody here with the skills needed to fix them when they break. When my toaster stops working in a year or two, it will go into a landfill and I will buy another disposable toaster. So I really haven’t even saved the five dollars. In the meantime, we’re ending up with poison in our toothpaste, our dog food, and the toys that we buy for our children.
What about the environment? How did my toaster get here? It didn’t come six thousand miles across the Pacific on a sail boat. It was manufactured in a factory in a country that doesn’t have our emissions standards. It was taken by train to a port in China where it was put in a massive ship. That ship then burned fossil fuels to bring it across an ocean to a port on the West Coast, polluting both the air and the ocean as it went. When it gets here, it still needs to be transported to my local Walmart before I can buy it. If you really want to do something about your carbon footprint, buy something that was made where you live.
I’m sure at this point that it seems I’m picking on China. That’s because I am. Let us remember that China is a communist country. I’m not trying to get into the argument about capitalism versus socialism or the benefits or evils of both. But this means that many of the factories that are producing goods there are the “people’s factories” owned by the Chinese government. This is the same government that brought us the massacre at Tiananmen Square. It’s the same government that puts people in prison, or even executes them, solely for the things they believe and the things they say. Some of these prisoners are forced to work in factories. That’s right, my toaster may have literally been produced by slave labor, produced by people who were deprived of their freedom solely because they believe in the same things that I believe in. This is not a cause that I want to support with the money that I earn. Not even to save $5. Not even to save $957 a year.
At the same time, I can’t buy a cigar that was made in Cuba, our next-door neighbor. What’s the difference? The difference is that China can make lots of cheap toasters.
The net result is that our wealth is being systematically taken from the United States and taken to China. This isn’t just our wealth. It is our power. The Cold War with the USSR was won without firing a missile. How? It is because Ronald Reagan started an initiative that became known as Star Wars, investing our wealth in better weapons systems. The Soviet Union could not compete. When they tried, what wealth they had dried up. They lost their power. And an empire became part of history.
Don’t think that that cannot happen to the United States. When China believes it has the power to swallow us whole, it will. We won’t have to do anything to provoke them. What did Tibet ever do to China?
What about those businesses that have moved their manufacturing to other countries? Aren’t they making more profit? Aren’t their shareholders making more money because they’ve become more competitive? Maybe so. But these benefits are temporary. Sure, you get an advantage when you can make your product for less than your competitor. But that advantage goes away as soon as your competitor builds a factory next door to yours in China.
What happens when everybody moves their operations to China? The Dollar goes down, the Yuan goes up, while demand increases for Chinese workers. Employees get harder to find, and more expensive to keep. Chinese wages are already going up by more than 25% a year, while the spending power of the US consumer is going down. It won’t be long before producing goods in China costs more than producing them here. But by that time, our factories will be gone and we will no longer have the skilled workers available to run them. The prices for goods will rise to what they were before, or higher. But we’ll no longer have the means to afford them.
So let’s recap here: We’re putting US companies out of business and losing US jobs. We’re increasing the number of people that need public benefits and don’t have health insurance. People are losing their homes. We’re flooding the market with cheap products that are exactly that: cheap. Low quality, and sometimes even dangerous. We’re systematically moving the wealth of the United States to countries that don’t even like us. We’re increasing the national debt, reducing our security, and ultimately raising taxes. And what have we gained? Cheap toasters.
“Live better, pay less.” How is that working for you?
What can be done about this? Since I am part of the problem, I’ll need to be part of the solution. The next time I need a toaster, I’m going to find one that was made in the US. It might cost me a little more. But I won’t be wasting my money. I believe I’ll get a better product. If I have a problem with it, I believe I’ll get better service. I’m investing my money. Not just in myself, but in my community; in our economy. The next time I call my bank because I have a question about my statement, and someone answers in India or the Philippines, I’m going to hang up the phone and find a different bank. And when I invest my money, I’m going to try to invest in companies that are keeping their operations here instead of sending jobs to other countries.
Our corporations need to be part of the solution, too. We need to stop sending our jobs overseas. There are better ways to compete than just by price. We can compete by providing better quality. We can do what we’ve always done, and improve our products with American ingenuity. With our operations here and not six thousand miles away, we can provide service that is better, faster, and more responsive. We can cut months off of the lead time between when a product is ordered and when it is delivered. We can respond faster to changing market needs. Let’s try to compete by being the best, not the cheapest. When our customers pick up the phone and call customer service, we can provide better customer service and improve customer loyalty by hiring people that speak and understand the same language that they do, maybe even someone who lives in the same city.
Even Walmart can help. They can put the products made in the US back on the shelf. They could prominently identify exactly which products are made in the US. Maybe some in the Walton family could even invest some of their billions into some US manufacturing operations.
I almost hesitate to ask the government for help, since that almost always seems to make things worse. But there are ways the government could help. We could be a little more selective about who we trade with. There are definitely disadvantages to imposing higher tariffs on imported goods, but they would have the effect of making it less attractive to make things overseas. And could have the effect of reducing our debt. We should remove any tax incentives that there might be to moving work overseas, and develop tax incentives for keeping business here. How about eliminating the capital gains tax for investments in US businesses that don’t have operations in other countries?
There are other ways to show the Walmart Mentality. As consumers, we show the Walmart Mentality when we use the self-checkout line at the grocery store; when we change banks to get a free blanket; when we switch to a phone company with lousy service to get a “free” phone; when we buy our produce at the supermarket instead of the farmer’s market; when we buy online without even going into the mom-and-pop store down the street. Businesses show the Walmart Mentality anytime they outsource their work to other countries; when they answer their phones with machines; when they offer discounts for “self-service”; when they hire undocumented workers; when they offer internet-only discounts or charge fees for calling their 800 number; when they get rid of their loyal, experience mature workers to hire workers that are young, inexperienced, and get paid less.
Here’s the Ricky D economic stimulus program. I want every US household to go out this month and buy an appliance that was made in America. Don’t waste your money. Buy something you need, have wanted for a while, or will need to replace soon. Replace some product you bought because it was cheap, but isn’t doing the job. This will employ other Americans. It will show support for companies that have hung tough and kept their production here. It will increase tax revenues and reduce our debt. This one act would probably do more for our economy than any of the stimulus packages have done.
I call my plan “Pay Better, Live More.”