You cannot shrink to greatness

I often borrow the phrase “you cannot shrink to greatness,” which I first heard when companies downsized to make their numbers. When leaders don’t know how to grow revenue or if market conditions do not support revenue growth, they cut staff. Lately, I have been using it to define the goal of nationalist thinkers who believe by restricting global trade, they can make things great.

On the whole, global trade is accretive to growth. Yes, we need to constantly review trade agreements to protect workers, but even trade agreements like NAFTA add value and jobs. If NAFTA were done away with, the state of Texas and the US would suffer, as would our key trading partners on our continent.

A venture capitalist said it succinctly. “Do you know what creates jobs? Customers.” The more trade, the more customers. It is that simple. As for the job losses which subtract from trade related gains, we do need to review the causes and effects. Many jobs have been lost dating back to the 1980s. Companies chase cheap labor, always have. So regardless of trade agreements, the companies were offshoring just as our President has done with his clothing lines and ball caps.

Also, where we are losing more jobs is to technology gains. We do much more manufacturing here, but with far fewer workers, than we did in the 1980s. These technology improvements will continue. So, before we blame trade agreements and throw the baby out with the bath water, we need to understand the metrics. What jobs are created, which ones are lost and why?

The other factor that does not get enough airplay is just as US companies are building products closer to customers, so are foreign companies here. Think of all the foreign cars and trucks made here in Tennessee, Kentucky, South Carolina, Alabama, etc. and think of foreign companies like Doosan, Mitsubishi, Michelin, Husqvarna, to name only a few, who have facilities here in the states. These are additive jobs to our economy.

Reducing trade is not conducive to growth. If you recall the movie “A Beautiful Mind,” about the schizophrenic John Nash, who won the Nobel Prize for Economics, ask yourself why he won? His theory called the Nash Equilibrium proved very useful in global deals in growing the pie bigger. The Nash Equilibrium says if we look to maximize only our own gain, while others do the same, the competition squashes trade. Yet, if we work together to make everyone benefit, the economic pie gets larger.

Reducing trade is also not conducive to greater security. The more commerce you do with countries that may not be an ally, the more you both will work to keep the commerce successful. So, military interventions would be harmful to that trade.

So, retrenching from the global markets, would not only be dilutive to growth, it would make us less secure. This is the argument that should be very visibly discussed as we look to improve agreements. Because no agreement is not a good course as it will cause a shrinking effect. And, you cannot shrink to greatness.

 

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16 thoughts on “You cannot shrink to greatness

    • Janis, you have defined the simplest of equations, which many overlook. Our most profitable period in America occurred when we had a strong middle class and the highest tax rates in our history. If we start by paying at least a living wage, investing in infrastructure and having robust career redevelopment program then good things happen. Keith

  1. Note to Readers: The above analogy explains the concerns over Brexit by financial experts. A strong EU is value accretive and makes the world safer. The US benefits from a strong EU, which should be better understood by our White House.

  2. Good analysis … very apt. The problem with making a blanket statement or policy of this sort is that the issue is multi-faceted, and those who make those ‘one-size-fits-all’ statements do not understand the complexities. There is a domino effect to most things, and in this case, canceling trade agreements would, I believe, result in a row of falling dominoes that would do us much more harm than good. That sort of thinking may come from a person of privilege (not mentioning any names here) who has spent his life with the mentality of … “oh … it’s broken? Don’t bother to repair it … just throw it away and buy a new one!”

    • Jill, complex problems require well-thought out solutions. This man has not shown a propensity for well-thought problem-solving and has a daily habit of creating more of them. Keith

  3. Dear Keith,

    I am pro-trade because in the long term, I am certain more jobs will be created. The problem with recent trade agreements is that the US workers have been frequently left out of the benefits, and unprotected but this can be corrected with better trade agreements. US businesses need to be incentivized to realize that with the trade agreements comes its responsibility to pay the employees a living wage with decent work environments. Companies making record revenues on the backs of its front line employees (like no raises beyond the rate of inflation for over a decade) should somehow be subject to negative consequences.

    Ciao, Gronda

    • Gronda, all good points. Our leaders need to look at the data and see how many, where and what jobs are added versus how many, where and what jobs are lost. They should also measure the security aspect, as trading with Cuba and Iran will make us safer and have a lingering effect given the relative youth of these countries. Keith

    • Lisa, thanks. I saw a news piece which showed how accretive NAFTA is to the Texas economy. Laredo is a crossover point and is a poster city of success with the banks and distribution centers there. Keith

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