Perception: Everybody agrees that the majority of jobs are created by small and medium-sized businesses. Politicians repeat this every day. They talk about job creators and how they can be motivated to expand business and reduce the army of unemployed. Currently, ABC news is conducting a major campaign called, “Made in America.” It seems they want to make people feel noble for buying American-made merchandise and ashamed for buying goods that are made in foreign countries.
Fact: America cannot compete on products where the major part of the cost is the labor that goes into them. The economic facts of life do not change. When I started my business career 67 years ago, the lowest labor costs were in Japan. Naturally, complaints poured in on how the United States should restrict imports from Japan.
As Japan prospered and the cost of labor increased, low-end manufacturing moved to Hong Kong, Taiwan and the Philippines. Our government, in an attempt to cut down on imports, started to demand certificates of origin. The politicians had to know that a great deal of the merchandise coming from Hong Kong was really made in China. By making a law requiring labeling, the source of origin did not materially cut down on the amount of merchandise made in China and shipped to Hong Kong. But the smuggling business became a major industry.
My point in sharing this with you is that you cannot legislate much of what you want to happen economically. The laws of supply and demand and the cost of currency far outweigh any legislation. It is only with knowledge and experience that you can separate the truth and reality from the myths and false hopes. We must realize the reality of the 21st century. We live in a global economy, and we compete not only with our neighbors, but also the entire world.
My opinion is that we should buy American-made merchandise whenever it’s the best there is and is available at a price that’s competitive. If most of our products and services are produced by small and medium-sized businesses, then we must develop a climate and a methodology that welcomes, trains and rewards entrepreneurs for innovation and success in the marketplace. They must be educated to the economic facts of life and motivated to produce the best products at the best price.
These last few years I have been greatly concerned by high unemployment and the economic problems we face. We don’t have a magic wand to wave over the population and thereby produce entrepreneurs. My many years of experience in the United States and around the world tell me that entrepreneurs evolve into ever more productive areas by “targeted thinking” and well-planned action. My new book, “The Evolution of an Entrepreneur,” attempts to equip the greatest number of Americans with this understanding and capability.
The reality of the economic world ultimately triumphs over rules and regulations. It is not within our power to make all things right that are wrong in the world. We certainly can and should sympathize with those who suffer, and we should do all that is in our power to either correct the situations or at least not be party to the hardships that are inflicted. We certainly do not want to be a part of a system that encourages subhuman working conditions and wages. This is the challenge of the global marketplace.
For example, a company like Walmart can have thousands of contracts with foreign suppliers and not have a clear picture of where each one will subcontract the actual manufacture of the merchandise. Details about wages and working conditions can often be murky. Yet, these are precisely the business details that matter in maintaining responsible and sustainable relationships. Learning corporate responsibility is part of an entrepreneur’s education, and it should include how to determine the true and ethical costs of doing business. In short, the words “with integrity” should be added to the phrase “Made in America.”
Here are a few of the recent articles I’ve read discussing these topics that you might want to review:
- Wal-Mart: Bangladesh factory in deadly fire made clothes without our knowledge
- U.S. Manufacturers Get Boost From Overseas Customers
- U.S. Businesses Find Loyal Customers Among Mexico’s Middle Class