Trends

IMPORTS: HIT AND MYTH

If Guinness kept track of the scapegoat most frequently used by American politicians, foreign trade would be a very strong contender. In speech after speech, politicians from across the political spectrum repeatedly blame the problems of declining employment-and declining industry-on "unfair" foreign competition. The advantage of import-bashing is that foreigners don't vote here, so politicians risk nothing by saying nasty things about German and Japanese products. The disadvantage is that some central premises of the bashers' rhetoric are largely false, as a recent study from the Brookings Institution indicates.

After looking at employment changes in 52 manufacturing industries from 1973 to 1980, Brookings analyst Robert Z. Lawrence found 25 in which employment declined. But how important were foreign imports in causing the employment decline? Not very. According to Lawrence, a decline in domestic demand was a far more significant factor than imports. Indeed, Lawrence concluded that there were only 7 industries in which imports were a factor at all in the loss of jobs, and in 5 of those 7, declining domestic demand was a more important factor than imports in causing job loss. So when push came to shove, the figures showed that out of 52 industries studied, in only 2-footwear and miscellaneous manufacturing-could a loss of jobs be traced primarily to imports.

What of the auto industry? Detroit is, after all, a hotbed of protectionism these days. Corporate and union bosses there, along with their obedient servants in Washington, declaim against the evil Toyota, but Lawrence tells a different story. Employment in motor-vehicle manufacturing did decline 19.2 percent over the seven-year period Lawrence studied. But a mere 6.4 percentage points of decline could be laid at the feet of foreign trade, while the other 12.8 percentage points were associated with reduced domestic demand.

Import-bashing is not an idle exercise. Its political purpose is rationalizing protectionism. Yet it's very questionable how much good protectionism does even for those it's supposed to benefit. In the 1973-80 period that Lawrence studied, a number of industries with declining employment (including motor-vehicle manufacturing and radio and television manufacturing) were the beneficiaries of artfully labeled protectionist measures- "voluntary" trade restraints, "orderly marketing" agreements, and the like. But as Lawrence told Reason, "These measures were unable to prevent the declines in employment from occurring." And they cost consumers-in the case of small automobiles, for example, an estimated $1,000 per new car in 1983.

When Lee Iacocca of Chrysler, Owen Bieber of the United Auto Workers, and their compatriots travel to Washington to lobby for quotas, domestic-content legislation, and other goodies at consumers' expense, they will probably not be deterred by Lawrence's study. But its conclusions should be recognized for what they are-an important piece of evidence that the causes of declining employment are much closer to home than Iacocca and company might choose to believe.

LABOR SINGING A DIFFERENT TUNE

Can it really be? Business Week columnist John Hoerr reports that three union presidents-Richard Trumka of the United Mine Workers, William Wynn of the United Food & Commercial Workers, and William Bywater of the International Union of Electronic Workers-are proposing repeal of the 1935 National Labor Relations Act (NLRA), long regarded as organized labor's Bill of Rights. And Lane Kirkland, president of the AFL-CIO, has been calling for "deregulation" of labor and a return to the "law of the jungle," in preference to today's federal labor legislation.

The union bosses' immediate motivation for the about-face on labor law is the shift of the National Labor Relations Board, which enforces the 1935 law, away from its traditionally pro-union inclinations toward what the bosses view as a pro-management disposition. A case in point was the NLRB's June ruling that unions may not restrict the right of members to resign from the union during a strike to return to work for the struck employer. The board issued the ruling when a local of the International Association of Machinists and Aerospace Workers tried to fine a member who quit the union to go back to work during a strike against a California auto dealer.

Following the NLRB decision, William Wynn charged that "the ideologues appointed by the Reagan administration have accelerated a process that began years ago to gut the protections for workers contained in the labor laws of this country." The June ruling was only the latest in a long string of NLRB decisions, many of which have reversed longstanding NLRB practice.

Apparently, then, at least some union bosses would prefer to operate according to general legal principles rather than under a special set of laws subject to various interpreters of the day. Obviously for organized labor, it's a case of the shoe now being on the other foot. Government control of worker-employer relations sounded pretty good as long as union sympathizers dominated the NLRB-as they have for most of its history. But the realization that both sides can play the game seems to have concentrated the minds of a growing number of union officials. Deregulation of labor relations may be an idea whose time is coming.

SWITCHING TO FREE-MARKET TV

In June, the Federal Communications Commission chalked up one of its most impressive moves toward full deregulation of broadcasting. The five commissioners voted unanimously to do away with rules governing the amount of news, local programming, and commercials carried by TV stations.

Broadcasters will no longer be required to devote 5 percent of their broadcast time to locally originated programming, 5 percent to news and public-affairs programming, and 10 percent to "non-entertainment" programming. Nor will they be held to a maximum 16 minutes an hour of commercials. Hence, much of television programming is now deregulated.

FCC Chairman Mark Fowler, the guiding force behind broadcast deregulation, observed in a statement that the commission's action "removes an unnecessary layer of government involvement in the television program decisions of the American people." The Los Angeles Times quoted Fowler as saying, "What is really at issue here is whether the government trusts the common man to make up his own mind about what to watch or not to watch."

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