provided by Research Papers in Economics
NOUSeCON6MKAS Dezembro '07 / (44/53)
Healthy State, Worried Workers:
North Carolina in the World Economy*
45
IIWIIIB∣eS∣e^^^ΛEdward Gresser
ШШШШШЦСУЯШиКШЛProgressive Policy Institute, Washington, DC, USA
Introduction: Americans Debate the Global Economy
I should begin by noting that we often raise “globalization” as a fundamentally new phenomenon:
a matter of the early 21st century and perhaps the 1990s, the rise of China, global supply chains,
the intrusions and opportunities of the World Wide Web and so on. In some ways this is true -
above all when we think about the effects of new media and methods of telecommunications. But
in some ways it is not. The questions about how the United States as a wealthy country might
cope with competition from rapidly developing poorer nations, and about how workers and
communities manage change, are as old as the United States, and so are the emotions that
these questions arouse.
The United States is now 231 years old as an independent country. The colonial experience
extends this to 400 years precisely, dating to the foundation of the Jamestown settlement in
Virginia in the spring of 1607. This earliest English colony in America (incidentally, not far from
Kannapolis, North Carolina) is an old global-economy story: the colony succeeded after a difficult
launch by capitalizing on England’s new-found love for tobacco. Americans have debated
global-economy issues ever since.
In 1792 Thomas Jefferson was complaining (among much else) about the ban imposed by Spain
and Portugal on direct trade between the US and the Latin American empires1. A year earlier, his
colleague and ideological rival Alexander Hamilton wrote the first U.S. government publication on
trade, known as the Report on Manufacture.
This latter document, despite its age, is strikingly relevant to the questions facing American
manufacturing - especially light-industry businesses like textile mills - in the global economy of
today. The Report is an argument for a government-led effort to develop a manufacturing
industry. Whatever the merits of this idea, Hamilton’s point of departure - a rebuttal of claims that
high American wages made factories unviable against competition from lower-wage countries,
which at the time meant Britain and France - remains relevant today.
Conceding that “in the article of wages the comparison certainly turns against the United States”,
and that the high pay - the “dearness”—of American workers is a disadvantage, Hamilton insists
that it is not an impossible disadvantage. Newly invented technologies and production
techniques, he says, can reduce production costs overall, allowing Americans to substitute
machines for human labor:
“Let it be supposed that the difference of price in two countries of manual labor requisite to the
fabrication of a given article is as ten, and that some mechanic power is introduced into both
countries which, performing half the necessary labor, leaves only half to be done by hand, it is
evident that the difference in cost of the fabrication of the article in question in the two countries,
as far as it is connected with the price of labor, will be reduced from ten to five in consequence
of the introduction of that power2".
* This paper was presented at the FEUC Conference Series Ciclo Integrado de Cinema, Debates e Coloquios,
November 5, 2007.
1 Jefferson, Report on http://www.yale.edu/lawweb/avalon/jeffrep2.htm
2 Alexander Hamilton, Report on the Subject of Manufactures, reprinted in F.W. Taussig, State Papers and
Speeches on the Tariff, Harvard University, 1892; reprinted by August Kelley, 1972, pg. 35. Italics in the
original.