The Procrustean Idiocy of the Homo Consumptus Mandate

by Richard Butrick (October 2015)

“In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest.” Adam Smith

It’s a no-brainer.

And here is an article from Forbes making the same point. Unlike the above quote from Investor’s Business Daily, the article admits that free trade does result in job losses. If fact it refers to another study by the World Trade Organization in late 2001 which estimates that between 1 million and more than 2 million of the 5 million American factory jobs lost since 2000 are traceable to low-cost imports. But the author maintains that these jobs were the low paying jobs and no big deal. Free trade is still a must for benefiting the consumer and should be the paramount objective of any administration.

[It makes] US consumers better off and making consumers better off is the point and purpose of economic policy.

The problem is that on the basis of the above, the political leadership of a nation may tend to willy-nilly make the leap and endorse the Homo Consumptus Mandate: leadership must take the necessary steps to enact the principles of free trade and globalization founded on the rock solid principle of comparative advantage to ensure a better life for their constituency. The problem with this reasoning/inference/extrapolation is that being better off is a cultural issue and not just an economic issue. At the core of the Mandate is the concept of man-the-consumer. Production/work/jobs are just a means to that end. This is a procrustean effort to shoe-horn human nature into the Consumptus model.

The dimension that is lost is that of man the producer/maker/builder/grower. Homo Formator is more at the core of our being than just consuming. We like to have productive useful lives. For most of us this means doing useful productive work. Helping ourselves our families and communities is at the core of our productive years.

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Ms. Hull goes on to write:

The city, much like many other rust-belt cities, was devastated by the effects of globalization and increased free trade. In 1974, around the time that globalization was beginning to take effect, 521,000 steel workers were employed in the metropolitan area. By 2000, those numbers had fallen to just 151,000.

Certainly management and the steel workers unions seemed hell-bent on mutual self-destruction. Rather than making the necessary sacrifices to adjust to the eventual reality of competing internationally, lines hardened into uncompromising confrontation. But that is not an argument for suddenly opening the flood gates and destroying home-grown industries that support a viable community life for its citizens.

Being sacrificed on the alter of free trade under the mandate that goods will be cheaper and more plentiful is small comfort to those who have lost their jobs and communities. Add to that the additional taxes needed for additional welfare and other social services support and the “obvious” net gain of cheaper goods is neither obvious nor even coherent as a measure of the amount of human suffering involved in the destruction of whole communities and a way of life.

report by the Council of Hemispheric Affairs (COHA) affirms:

The combination of increased imports from Mexico and a growing trade deficit have led to job losses, mostly in high-wage, non-college-educated manufacturing positions, in all 50 U.S. states and the District of Colombia.(9) When these displaced American workers later re-enter the job market, they find difficulty securing new jobs and often have to settle for markedly lower wages. As of March 2011, the United States has lost approximately 700,000 jobs due to disruptions in supply chains brought about by NAFTA.(10)

… Although NAFTA has been detrimental for the United States, the free trade agreement has been far worse for Mexico. While proponents touted NAFTA as ostensibly a beneficial social policy, the income gap in Mexico has in fact widened since NAFTA’s implementation, with this development creating even more poverty in a country already afflicted with the concentration of wealth in too few hands. The poverty rate in Mexico rose from 45.6 percent in 1994 to 50.3 percent in 2000, and the number continues to climb.(11) In 2010, the World Bank reported the most recent poverty rate in Mexico at 51.3 percent.(12)

… Perhaps the most devastating blow dealt by NAFTA to the Mexican economy was the near destruction of Mexico’s agricultural sector, in which 2 million farm workers lost their jobs and 8 million small-scale farmers were forced to sell their land at disastrously low prices … Thus, NAFTA has not only negatively impacted Mexico’s economy, but also altered its national identity by infringing on ancestral traditions.

While it is legitimate to posit Homo Economicus/Consumptus for scientific purposes, it is simple minded and stupid and causes great harm to use it as the primary basis for socio-economic planning. As  per the Forbes quote above:

… making consumers better off is the point and purpose of economic policy.

I moved to Chicago to work with churches that were dealing with the devastation of steel plants that had closed all throughout the region. Tens of thousands of people had been laid off. There was never a federal effort to come in after those closings and to figure out how can we retrain workers for the jobs of the future, how can we invest and make sure capital is available to create new businesses in those communities. And so not only do we have to deal with our trade agreements, not only do we have to eliminate tax breaks for companies that are moving overseas, not only do we have to work on our education system, but we also have to have an intentional strategy on the part of the federal government to make sure that we are reinvesting in those communities that are being burdened by globalization and not benefiting from it. (Source: 2007 Democratic Primary Debate at Howard University)

But for the POTUS fee trade is still a must for benefiting the consumer and should thereby be the paramount objective of any administration. The Homo Consumptus Mandate is still in the saddle only this time it will be done right.

The joker in this deck is the presumption that our dear leaders know what the jobs of the future will be and that displaced workers can be miraculously re-educated to be “world-class” competitors for such jobs:

… retrain workers for the jobs of the future, how can we invest and make sure capital is available to create new businesses in those communities.

And that is very much the point.

The free trade vs. protectionism debate tends to be mired in the false alternative of having to be full-blown good or bad one way or the other. They both have potential costs and benefits. Navigating through the Scylla (free trade) and Charybdis (protectionism) in developing socio-economic policy with the focus on the quality of life of its citizens is no mean feat. Cleaving too close to one or the other can bring disaster.

It’s the culture, stupid. And that means that protectionism should not be taken off the table in considering what course of action to take when home grown industries which have been part of the identity of a culture become challenged by cheaper foreign goods. For instance, in terms of their cultural life, wisdom might lie in protecting the wine making tradition/industry of France or the cheese making tradition/industry in England from the shifting sands of comparative advantage. A no-brainer? You bet.

Taken in conjunction with the serious moral issue of whether it is right to destroy the livelihood of a minority for the slight benefit of a majority, preserving the cultural life and economic vitality of a nation is a hell of a lot more complicated than cheaper stuff.

 

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Dr. Richard Butrick is an American writer who has published in Mind, Philosophy of Science, Notre Dame Journal of Formal Logic, International Journal of Computer Mathematics among others.

 

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