The consumer did not benefit as the marginal cost reduction from exploiting coolie labor was not passed on to the retailer and hence it went to the bottom line. Therefore international stock holders were also beneficiaries of unrestricted, no duty, access to US markets. I hope it is not too late....
“The consumer did not benefit as the marginal cost reduction from exploiting coolie labor was not passed on to the retailer and hence it went to the bottom line.”
True. The enhanced margins went into the hands of the speculators. Corporations divested manufacturing in favor of offshoring. The billions of dollars of capital once invested in productive equipment, as well as the improved margins, were handed over to the Wall Street banks to fund stock buybacks. Billions, if not trillions of dollars of capital were consumed in the stock market casino instead of being invested in modern equipment to make US manufacturing competitive.
Up to about 1970, American CEO’s followed a career path through sales and marketing where they learned to understand customers and producing products to meet customer needs or they came up through manufacturing and product development where they learned how to make products efficiently and deploy capital and labor effectively. Whether from sales/marketing or manufacturing, executives had to earn their stripes by actually producing something of value and being measured and rewarded for real results.
In the 1970’s the corporate staff financial executives and lawyers, with their MBA’s and law degrees, wrested power from the producer executives. These Ivy League educated administrative managers created “value” through financial manipulation and legal artifices, not by producing and selling products. Hence, instead of deploying corporate capital in the 1980’s and 1990’s to modernize the factories built in the 1950’s and 1960’s, the financial CEO’s teamed with Wall Street banks to put American industry through multiple waves of restructuring, downsizing, acquisition, divestiture, and offshoring. Production was sent overseas, balance sheets were leveraged, divisions were sold or shut down, employees were shed. Once great and mighty companies (US Steel, Burlington Industries, Westinghouse, and hundreds of others) stopped growing and innovating ceding entire markets and industries to foreign competitors.
Instead of innovating and investing in improving the productivity of their businesses, the financial CEO’s allied with big government to lower tariffs and quotas so the shedding of manufacturing assets could be financially justified. Once great American factories built in the 1950’s and 1960’s were shuttered and the capital to rebuild them was sent to build modern, efficient factories in foreign countries. The financiers also changed executive compensation from being primarily salary based to salary + megabonuses + lucrative stock options. Executive pay was manipulated to enrich the highest paid executives in the firm. In the previous era the CEO made 10 to 12X the annual pay of the factory worker. Under modern, highly manipulated executive compensation structures it is not uncommon for the CEO to make hundreds of times the wages of the lowest paid workers. Even the poorest performing CEO’s, many of whom destroyed their companies, walked away with millions of dollars in guaranteed bonuses, stock grants, and golden parachute severance payments. Meanwhile, US factory workers with decades of experience were forced to train their foreign replacements and then were cast aside with a few weeks of severance pay.
The modern concept of “free trade” has been an absolute failure for the US economy and the American worker. Like every failed government program its defenders and vested interests continue to claim success even in the face of facts that scream failure.
Slap a 30% or higher tariff on all imported goods. Put in place a corporate tax rate of 0% on profits made from US sourced raw materials and components in US factories while retaining a 30% profit rate on profits generated from overseas sourced products. Watch capital flow into US manufacturing and the creation of millions of middle class jobs. Better the IRA and 401K savings of American workers be invested in new factories, producing goods for American citizens, than continuing to put it in the hands of Wall Street mutual funds where it is churned in the stock market in order to siphon off billions in transaction fees which flow into the pockets of the speculators.