By Henry M. Seggerman
President, International Investment Advisers
Many Americans like me are scratching their heads, wondering why millions of Koreans believe myths about how "Americans don't eat their own beef." It seems completely irrational. Well, many Mexicans are also scratching their heads, wondering why millions of Americans believe myths about how "Mexicans stole their jobs."
Let's step back from this a bit.
Nationalism and racism are our underlying animal instincts. Man is just another primate who kills primates from the other herd to keep the best hunting and grazing lands for his herd. This instinctual behavior is why, for example, so many Chinese feel it is more important to muzzle foreign criticism of oppression in Tibet, than to seek democracy.
It could be argued that imperialism, slavery and genocide are the most advanced forms of nationalism and racism because they maximize benefits. By conquering other nations and enslaving or exterminating the people, nations and ethnicities are able to steal property most comprehensively, for their own advancement.
Sports are exclusive to human animals, and are a symbolic outlet for these nationalistic, racist animal impulses. With the exception of a few soccer hooligans, humans who attend sporting events are non-violent, and only a handful of athletes must lose their lives each year to make the spectacle satisfying.
Thus, if we view genocide as efficient nationalism, and sports as symbolic nationalism, then we should look at protectionism as stupid nationalism. Protectionism is stupid, because, rather than building up a nation's property, it destroys it.
Americans love to shop at Wal-Mart, Costco, priceline.com, and elsewhere for the best possible deals. These suppliers have succeeded in reducing costs for their customers by hunting for the best-priced products from the most efficient factories and distributors. These bargains would not be possible without the help of America's 25 million-strong undocumented foreign workforce ― most of them actually recruited by these companies.
But every night, CNN demagogue Lou Dobbs tells America that because "Mexicans are stealing our jobs," we must forcibly round up and deport those 25 million human beings. Recent polling consistently indicates that a majority of Americans support this brutal ethnic cleansing. And local law enforcers have now begun shutting down factories and imprisoning all dark-skinned people without a green card ready for deportation. Dobbs has rewritten "Bring me your wretched refuse" to "Bring me your whites-only wretched refuse." Imagine his bombast if the foreign workforce were Haitians!
Aside from being immoral, hypocritical, and racist, America's new anti-Mexican pogrom is self-destructive. First, Wal-Mart and Costco are going to have a lot fewer bargains on their shelves for thrifty American shoppers. And, more importantly, the companies that recruited the Mexicans will just go out of business or move their factories ― guess where? ― to Mexico, and other lower-income countries where there's at least a chance of operating profitably. So, for every five Mexicans Lou Dobbs succeeds in deporting, there will be one middle-class American manager who loses his or her job, and zero new jobs. Thanks, Lou (you imbecile).
As for the reality of job losses, unemployment in the United States is only 5.5 percent, far below levels in the 1980s. Rust Belt job losses have been going on for decades. These job losses were not caused by Mexicans. They were caused by stupid American manufacturers who were too lazy to modernize. Ford and GM are likely to go bankrupt (or get bailed out by taxpayers) because they have been making cars that only do a paltry 24 miles per gallon for the last ten years, while Asian auto manufacturers were making them with mileage considerably higher.
While America is regressing into the stupidity of protectionism like someone who has sustained a massive head injury, Korea, I am sorry to say, has never come close to emerging from the stupid results of protectionism. At the end of last year, Koreans were paying $72.22 per kilogram for their beef and $2.83 for rice, while the rest of the world was paying $2.79 and 28 cents. Koreans pay more than ten times the real cost for beef and rice. The only reason for these gouging-level prices is protectionism.
I do not believe there is a culprit like Lou Dobbs in Korea. The Big Lie that "Americans do not eat their own beef," which drove hordes of Koreans into a Hutu-like nationalistic frenzy, came from a single Internet posting. We all know the saying "Follow the money" - find out who benefits from this. I will not be surprised if the "Americans don't eat their own beef" Big Lie was started by Korea's farming industry.
Farm cartels wield ruthless power on a worldwide scale. For example, the cotton cartel has successfully boosted the subsidies American taxpayers are forced to pay to millionaire cotton growers. As a result, two weeks ago, the World Trade Organization condemned the United States and told Brazil it should take retaliatory action against other U.S. exports.
Protectionism-induced overcharging in Korea is not limited to staples. While Korea is famous around the world for superior and cost effective exports like cars, cell phones, and A/V equipment, the unfortunate Korean consumer is forced to pay 50-100 percent more for the same key export items foreigners buy so cheaply.
Because they are gouged on so many products, Korean consumers have far less disposable income to spend on educating their children, improving their lives, or just having some fun. The stupidity of protectionism results in stunted and depressing economic growth that cannot possibly exceed 5 percent. As a result of protectionism, Korea falls further behind China every day.
Foreign Direct Investment (FDI) is crucial to economic growth. Korea has completely destroyed any potential for FDI in its insanely self-destructive persecution of Lone Star - without a doubt, the poster child for stupid protectionism. If the sale to HSBC were approved tomorrow morning, it would still take at least ten years to rebuild foreign investor confidence in FDI into Korea.
There has been worldwide economic instability over the last year. It is not surprising to see hordes of protectionist fanatics in the streets in Korea and the anti-Mexican pogrom unleashed in the United States. Economic instability has quite often triggered a protectionist popular backlash. With uncertainty comes suspicion, a hunt for scapegoats, the hatred of foreigners.
The U.S. stock market crashed in 1929, leading to huge uncertainty. Fanned by demagogue politicians, the American people largely blamed foreigners for a calamity, which had in fact been caused by American speculators and weak American financial regulations. In 1930, over the objection of 1,028 economists, the U.S. government passed the Smoot-Hawley Tariff Act, raising U.S. tariffs on 20,000 imported goods to record levels. Foreign countries retaliated with their own tariffs and even full boycotts, and the Smoot-Hawley turned a stock market crash into the Great Depression. It's a vicious circle: instability causes protectionism and protectionism causes more instability, leading to disaster.
The Korea-U.S. Free Trade Agreement had so many exceptions (notably rice), it was not really all that free. But even this watered-down facsimile will probably be the unfortunate victim of rampant stupid protectionism in the United States and in Korea. Our likely next president wants to squash it, and you Koreans just want to get rid of your president altogether. A sorry state of affairs for both of us, indeed.
So, when I see Lou Dobbs and the Korean rumor-mongers in the bread lines next year, I will just say, I told you protectionism was stupid, but you just would not listen to me.