Monday, February 9, 2009

Protecting Work

In yesterday's New York Times, the economist Gregory Mankiw trots out the standard case against protectionism - i.e., policies that are designed to protect domestic jobs, not promote their flight overseas - one that is made as if it were so dispositive that nothing further can or should be said. Against arguments that job loss is undesirable, he writes, "There is, however, another side to the story. The loss to American producers comes with a gain to the many millions of American consumers who prefer to pay less for the goods they buy."

An implicit cost-benefit analysis underlies this argument: the loss of some number of decent paying manufacturing jobs can't measure up to the benefits of cheaper products for millions of Americans. Proof is in the Wal-Mart pudding: fact is, lots of people shop there, proving that they like cheaper prices. The loss of our manufacturing base is a small price to pay for inexpensive salad-shooters and tube socks.

Why is this argument so patently true for economists that it is proffered as if it didn't merit further thought? Because, of course, it's better when lots of people can purchase cheap goods that are manufactured in the lowest labor-cost areas of the world. Comparative advantage insists that everyone wins in this scenario. This may be true - as far as the economic theory is concerned, a theory that is populated not so much by humans as "econs."

Yet, what if we were to widen our aperture a bit and consider whether a nation of self-defined consumers is a good thing? What if the very self-definition of ourselves as "consumers" - now used unselfconsciously as the one universally valid term to describe Americans (not "workers" and certainly not "citizens") - is deeply damaging to the civic and moral culture of a nation? What if economic and political policies that promote consumption over good, hard work induce very bad habits that in turn lead to very bad economic outcomes? Would we praise that as good economics, much less good politics or even - dare I say - good for the soul?

The economics of consumption is, in the first instance, a recipe for short-term thinking. It encourages the consumption of products intended very soon for the trash heap, thus promoting a culture of immediacy and waste. It is an ethic that encourages instant gratification, rather than encouraging virtues of thrift and deferred gratification. It encourages a false sense of needing to "keep up" with the neighbors, such that everyone must live as if they have a country estate in Connecticut (and why eventually Martha Stewart began peddling her wares in K-Mart). It encourages us to ignore the hidden costs of our consumption, particularly the high energy usage of this form of consumerism and the high quantities of resulting entropy - in the form of waste, blighted landscape, decimated downtowns and declining pride of work. It destroys community, increases our anomie and isolation and makes us ripe pickings for government programs when there is an economic downturn.

A culture of work - good, honest, hard work - on the other hand, promotes virtues of care and thrift. Where we have a sense that people near and around us will use our products, we work with pride and responsibility. Where we will have to live with the costs of our production, we work in ways that minimally damage our living places. Where we earn an honest wage for work well done, we spend responsibly, knowing that we in turn can rely on the good craftsmanship of the products that we buy. We value quality over quantity. Where we learn to delay gratification, we learn to distrust easy credit as something too good to be true, as a game for grifters and cheats. A culture that values work over consumption is one that is likely to view manias with a jaundiced eye, aware that the cycle of nature is not one that offers quick rich rewards, but slow and steady earnings that are come by honestly and with patience and hard work.

Am I suggesting that we should engage in protectionist policies? I don't know what the economic effects of that would be, though I'm told they would be dire. Still, I look around me and see what the our policies of open trade and globalization have gotten us and ask, how much more dire would they be? Would we be poorer than we are now? Perhaps, but it would not be a poverty recklessly and dishonestly achieved. Would we have less things filling smaller houses? Let us hope so. Would we be bemoaning the things we did not have as a result of not having let all our good jobs go overseas? Maybe. I wonder. But I do know for certain that anyone suggesting that a culture of consumption is so plainly superior to the alternative had better take a step outside the ivy gates for a reality check.


robert said...

Better yet, they should take a step outside their gated communities.

Erin said...


FLG said...

Dr. Deneen:

The result of the loss of manufacturing is not that we just become a nation of consumers. The United States' comparative advantage is that we are highly-skilled labor. If the world were a small town, then the doctor and lawyer would be Americans. However, doctors and lawyers, much like professors, don't make things. They provide services.

To continue the analogy of the small town, several carpenters, cobblers, and coopers are still American. However, the Chinese et al can do those jobs cheaper. Therefore, the American cooper must become a lawyer, doctor, or professor who does not make things, but provides service.

The goods that will be made in the United States will be high tech stuff like gene sequencers, but cars and toaster ovens -- not so much.

Perhaps the transition from carpenter and farmer to lawyer and doctor will create major consequences, but all things being equal I would rather the United States be a nation of educated professionals than ditch diggers.

Patrick Deneen said...

Good to hear from you... I figured this post would get your dander up.

Doubtless we have fewer coopers and more lawyers now. I don't know that that's a good thing, since we also seem to have more frivolous lawsuits now, and crappy plastic barrels to boot. But, above all what we seem to have more of among the professional classes are more people in the financial services. Or, at least we did. They were producing the financial equivalent of frivolous lawsuits.

There is nothing wrong with making things. It is good work for idle hands that might be doing too little, or too much ill, otherwise. What we have more of above all, I think, are people who do mind-numbing "service" jobs like greeting people at Wal-Mart or cashiers at places with cheap products. Why we should praise these jobs in the "service" sector, and hold physical labor in contempt, is not only a false estimation of the relative satisfaction drawn from each, but well-nigh Gnostic heresy that despises the body.

Empedocles said...

And what happens to those Americans that can't become doctors and lawyers?

FLG said...

Dr. D:
I don't think there is anything wrong with making things. I just think that Americans will have to make things that are difficult and complicated to make.

Americans will have to stay continually ahead of the curve on the products they make. That or niche highly-skilled products like custom designed steel for high tolerance applications. Basically, things that can't be mass produced in China.

Perhaps providing services is not as rewarding to human nature as physical labor that produces a tangible product, but I don't know. I do get miffed about the quality of plastic barrels nowadays though.

Just to be perfectly clear on my point, they don't actually have to become doctors or lawyers. I was trying to put it in context of a metaphor. They just have to be highly-skilled and highly-productive. That usually means they willprovide services, as the higher educated are typically in the service economy.

I don't want to write a tome, but there are societal factors, for example infrastructure quality and available capital, and individual factors, for example education, that make people more productive. So, it's not the case that all Americans need to become lawyers or doctors, but when they produce things they will need to produce highly-specialized things.

Fisher Ames said...

Dr. Deneen:

A consumer culture is by no means blatantly superior to every other culture. But the consumer culture is not a matter of economic choice in government's economic policy, but something much more firmly ingrained in the American spirit. We have been a consumer society since at least 1920, and ultimately government must craft policies that deal with that reality, not the other way enough. Even if economic protectionism could lead to a shift towards a "culture of work," it would be contingent on the American people accepting that en masse -and, honestly, how likely is it that the cultural thrust of the American people is going to be towards a culture of work, thrift, and virtue, when it is now so mired in one of consumers, celebrities, and bailouts? A shift like that cannot be made by government policy, and it is unlikely to come from the own volition of the American people, from what I can tell. Therefore, we must settle for the best that we can do in the circumstances given to us -we are a consumer culture, and any change in that would take generations and be very difficult to enact.

F. Ames

Empedocles said...

I realize that not all Americans can be doctors and lawyers. Perhaps I should have phrased my question as what about the Americans that can't become "doctors" and "lawyers." Not everyone is "highly-special."

Casey Khan said...

Dear Prof. Deneen,

You make excellent points about the consumer based economy. I think this consumer-centric manner of economic speaking owes its tradition from the Keynesians and the amoralists who wished to undo the petty virtues of the commoners by unleashing the "animal spirits" of consumption.

As an antidote to Keynesian consumer-centric thinking here is the work of Catholic-Austrian economist Guido Hulsmann who argues for a free market that gives no "particular favor to bigness." Hulsmann appeals to Aristotle, Oresme, and the Social Teaching of the Church to find ethical conditions to economic phenomena.