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Blame US Productivity, Not Overseas Labor

By Ronald J. Busch and David J. KramerRonald Busch is professor of political science at Cleveland State University. David Kramer is president of an investment firm in Cleveland. / October 3, 1989

ECONOMIST Tas Papathanasis has advanced the idea on this paper's opinion page that it is the ``shameless working conditions and wages in developing countries'' that are responsible for the reduced competitiveness of United States labor (``Smyrna: The Crucible of American Labor,'' Aug. 11.) The explanation for these differences in wages are not only ``oppressive governments,'' which inhibit the emergence of democratic unions - but totalitarianism, subsidies, and a willingness to exploit native labor. Further, it is claimed that when union wages are extended to workers in third-world countries, American labor will again be competitive. This is nonsense. Wage differences between countries contribute as much to understanding the loss of US labor competitiveness as did the nostrum that wages were responsible for the inflation that bedeviled President Carter.

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Unions have been important in the history of American labor, and especially so in the basic industries and the trades. But to refer to unions, as Mr. Papathanasis does, as a ``nearly sacrosanct piece of American life'' ignores their history and declining popularity. Unions, for many reasons, have never spoken for a majority of American labor. Unions were (and still are in some cases) often as closed as the ``closed'' shops against which they battled. Their membership now accounts for about one in five workers, and probably never exceeded 25 percent of the total work force.

Nor have most American workers enjoyed the high wage rates of the AFL-CIO, the proposed extension of which to third-world countries will presumably result in the resurrection of US labor. Moreover, the assumption that unions in third-world nations would be democratic must be considered in terms of our mixed experience with them. Recall the tragic outcome of Jock Yablonski's effort to make the United Mine Workers, under Tony Boyle, more democratic, and the similarly inspired democratizing efforts by the Teamsters. Decertification elections, held to expel a union from the workplace were rare before 1970. They are now increasingly frequent. And one opinion poll after another has shown that big unions, like big corporations and big government, have become objects of public suspicion. Unions sacrosanct? Yes, perhaps - but not everywhere in America.

Most third-world countries are agrarian societies in which unskilled labor is not only abundant and cheap but, according to Papathanasis, useful to high-tech societies since high-tech automation has made many of the production tasks simple and repetitive. If this were indeed the case, then the unskilled worker in the US would be employable rather than unemployable.

The American economy has changed. From an agricultural society emerged a national industrial giant. It was a closed economy, one that, with time, was fixed by the institutions of the corporation and union. But recent developments in science and technology have made us part of a global economy. Resistance to that idea has resulted in a belated recognition of a new economic order. The outcome was predictable. The US position has slipped, and the problem is not limited to a decline in US labor competitiveness, but overall American competitiveness.

Once producer of 29 percent of the world's goods and services, the US now accounts for 26 percent of that GNP. Once undisputed leader as a dispenser of foreign aid, the US is now the largest debtor nation. In this century, the US has been the unrivaled leader in the production of steel and automobiles. No longer. Moreover, after 1992 a unified European community will pose new challenges to the US.