by Joshua Zambrano

Created on: December 03, 2008

'Can' the American car industry stage a comeback? Undoubtedly. With more and more of America's non-service industries leaving the country as the dilemma which is outsourcing grows more severe, that is becoming less and less likely, however.

According to former Secretary of Labor Ray F. Marshall's book, 'Back to Shared Prosperity', services are the primary employer of part-time workers (74%), which means much lower hourly wages (just 46% compared to the goods sector), less job stability, and fewer fringe benefits.

'Free Trade'. Sounds good, doesn't it? Yet its implementation means the disestablishment of trade barriers and protections such as tariffs that would otherwise prevent the foreign invasion into our job markets from nations which allow their workers to be paid much, much more cheaply.

Here's how it works. America has a $6.50 minimum wage. Next-door neighbor, Mexico, has a $3.50 minimum wage. Thanks to the North American Free Trade Agreement, both countries may merrily transport their goods back and forth with very little penalty.

Guess what happens? A lot of greedy companies and CEOs, looking to gain any competitive edge they can, will create factories in Mexico instead (or Taiwan, or China, or Venezuela, or North Korea). It's not like it hurts them. They can even ship the goods back here and bargain-hunting Americans will happily buy them over the higher-priced American products, at the cost of American jobs.

This is why all our vital industries are exiting the country. The steel industry was first to expire. Now the car-making industry is the one in danger. More and more of the jobs in this country involve the service sector. Why? Because those are the only ones which of necessity must stay in the country! (Hard to outsource drive-thru McDonald's jobs, unless you count illegal immigrants.)

What's needed to turn this around is some kind of protection for American workers which will level the playing field. A simple plan I've devised would tax the incoming imports of other countries based on 90% of the difference between their minimum wage and ours. In the case of Mexico, they let their workers be paid $3.00 less than ours, so their goods would be taxed $2.70 more.

So simple a protection would permit American workers and their companies to compete with foreign-based businesses, businesses which would no longer have an edge in being able to pay workers less. While other countries might dislike the tariff, it would be difficult for them to complain since it simply reduces the unfair advantage they have in one regard by penalizing them for not protecting their workers with higher minimum wages - which they ought to be doing anyway. Any outrage they expressed will serve only to call attention to their poor employment conditions.

What is more, with so many other countries suffering from America's brink-of-a-recession crisis, the world expects and even hopes for just such a drastic step as this from America. With global markets now more clearly than ever shown to be tied to America's own financial success, such a measure would be more likely than ever to pass largely uncriticized.

The probabilities of America's major industries, including the vehicle industry, staging a comeback are directly tied to whether or not America protects those industries with just such a major protection against free trade as the one I am proposing here.

Additional Reading

'Back to Shared Prosperity' by Ray F. Marshall

List of minimum wages by country: Wikipedia

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