In response to:
The Great Japanese Misunderstanding from the November 8, 1990 issue
To the Editors:
Although James Fallows’ article “The Great Japanese Misunderstanding” [NYR, November 8, 1990] is excellent, he does not analyze one aspect of the loss of American industry to Japan and other low wage countries.
Behind the concept of Free Trade, which was free in only one direction, the Reagan administration encouraged US industry to seek cheap labor overseas. The agenda for Reagan and much of American industry was to reduce the price of American labor and decimate the unions. This was effectively accomplished. The low cost imports, products of both foreign industry and state of the art offshore plants built by American companies, were paid for by deficit spending through increasing military expenditures, wives joining their husbands in the work force and a tripling of consumer debt. Prosperity in general was stimulated.
Only now when the total US debt, Federal, State, corporate and consumer has become unmanageable, has the disastrous effect of the Reagan policy become apparent.
The aggressive Japanese push to dominate American manufacturing and markets could not have succeeded so well if the administration’s overriding agenda of high profits for industry and low wages for labor had not prevented any effective counter moves.
When viewed from the point of view of the balance of power in the world, the industrial base is in the long run probably as important as military capability. The disregard for the preservation of that American industrial power base for the short term benefit of business interests could be construed as un-American.
San Francisco, California
January 31, 1991