By Thane Peterson
Boycotting French and German products is silly. If Americans really want to make a political statement at the mall, try avoiding Chinese goods
A lot of Americans are calling for a boycott of French and German products as retaliation for those nations’ refusal to support a war against Iraq. I’m all in favor of Buy American campaigns (or, more realistically, Buy North American campaigns now that the U.S., Canada, and Mexico are tied together economically through NAFTA). But I have a better idea. If Americans are going to boycott any nation’s goods, make it China’s, instead.
Boycotting France and Germany is silly. Unless you’re fond of French wine or can afford a BMW or Mercedes, France and Germany don’t have too many products to boycott. That’s why Congressmen Bob Ney of Ohio and Walter Jones of North Carolina had to resort to the symbolic measure of renaming French fries “freedom fries”. Even that’s ridiculous in my view.
Targeting France and Germany is also anti-democratic. The establishment of a strong democracy in Germany is one the greatest accomplishments of the post-World War II era. And the fact that Germany — formerly one of the most warlike nations on earth — is now standing up to the U.S. in the name of world peace is a triumph, not a defeat, for world democracy. American soldiers didn’t fight and die in World War II to establish lapdog governments in Europe. The goal was to promote freedom and democracy — which, whether you agree with their specific policies or not, is what we now have in France and Germany.
LABEL CHECK. China, however, is another kettle of fish. It’s ruled by a cabal of aging, unelected autocrats. It jails or deports dissidents who agitate for democracy or openly believe in religions deemed unacceptable to the government, such as Falun Gong. It’s trying to crush Tibet, a peaceful Buddhist nation, and would dearly like to take control of Taiwan, a long-time American ally. It employs prison labor and forces abortions on many of its own citizens. And, like France, China has said it would likely vote against the U.S. and Britain on the Iraq issue in the U.N. Security Council.
To my mind, China also represents a major economic threat to the U.S. America’s trade deficit soared to more than $400 billion last year, more than 4% of GDP. China accounted for nearly one-quarter of the total, far more than any other country. If you stroll around stores such as Wal-Mart, Target, and Sears checking the labels on products, the big retailers start to look like giant funnels for cheap Chinese clothes, sports equipment, toys, and other goods. And China is trying to move upstream into producing higher-value-added goods, such as aircraft components, autos, computers, and telecommunications equipment.
It’s no secret that U.S. manufacturing already has been hurt as production has shifted overseas. Only about 17 million Americans still work in the sector, but 48% of that total are in service jobs connected to manufacturing companies, such as engineering, consulting, marketing, and design. It’s shocking to realize that fewer than 9 million Americans are directly involved in making something — and that the number seems destined to continue dwindling steadily.
ENRON USA? The bright lights who have crafted U.S. economic policy for the past two decades assure us that none of this is really worrisome. Competition from cheap labor nations, the theory goes, is good for the U.S. economy because it forces Americans to train for higher-paying service jobs and provides U.S. consumers with a bounty of cheap goods. China, in particular, is steadily becoming more democratic, they contend, and trade with the U.S. is a major force for further reforms. Wal-Mart, for one, says it refuses to do business with any factory that employs prison labor and regularly polices its suppliers in China and other developing nations to make sure their labor practices are responsible and humane.
However, it seems to me that the trade deficit is a disaster waiting to happen. The structure of the U.S. economy is now strikingly similar to the “Look ma, no assets” model pioneered by Enron, with Americans still holding the service jobs but most of the actual production farmed out to suppliers overseas. Having so many factories outside its borders makes the U.S. more vulnerable than other nations to any disruption in the free flow of trade — which is why terrorists are expected to target shipping containers or air-cargo transport in future attacks.
The U.S. standard of living is also heavily dependent on the rest of the world’s confidence in the American economy and its system of capitalism in general. The trade deficit has been sustainable so far only because the dollar has been so strong — essentially, it’s a huge vote of confidence by foreigners willing to sell their goods on terms highly advantageous to Americans because they believe in the future of the U.S. economy.
PICKING UP THE TAB. As Enron discovered, however, a loss of confidence can quickly lead to a downward spiral. You have to wonder if the dollar’s recent decline is a temporary reaction to the slowing U.S. economy — or the beginning of a long-term loss of confidence that could permanently erode the U.S. standard of living.
It could be the latter for many reasons. The seeming unilateral nature of a war with Iraq could lead to an increase in anti-Americanism around the globe, for one thing. Corporate scandals have already raised questions about the U.S. system in the minds of many foreigners.
More important, only a year-and-a-half after the Septembre 11 attacks, projected federal budget surpluses have disappeared, and the Bush Administration is racking up huge deficits to fund its war on terrorism. A go-it-nearly-alone invasion of Iraq will put immense new strains on the budget. And if the war on terrorism must continue for years to come, as seems likely, the question arises: How can the country possibly pay for it without undermining the economy?
BUYING POWER. So what does all this have to do with boycotting China? If America is really sending troops into Iraq to promote democracy there, average Americans can’t do much to help. Cutting back on consumption of Chinese goods, on the other hand, is something everyone can do to promote the spread of democracy around the world. My guess is that a voluntary consumer boycott would push Chinese authorities to democratize far faster than they otherwise would. And spendthrift American consumers could see how frugal they can be without resorting to the “Made-in-China” label.
More important, in my mind, is the idea of favoring North American products over foreign ones whenever possible. The sort of beggar-thy-neighbor consumerism that sends millions of jobs packing overseas seems inappropriate in a time of crisis. It also seems clear to me that U.S. service industries such as software development and telecom are about to come under the same heavy competitive pressure as manufacturing jobs did, not just from China but from India and other rapidly developing nations. Buying North American could help keep more jobs at home, including yours and mine.
Peterson is a contributing editor at BusinessWeek Online. He can be contacted at thane33@aol.com.
Edited by Douglas Harbrecht
