It's a story that will have conservatives drooling with glee. Indiana's Democratic U.S. Sen. Joe Donnelly has long blasted free-trade policies for killing American jobs. Last year, he harshly criticized Carrier Corp., an air-conditioner and furnace maker, for exploiting $3-an-hour workers when it announced plans to wind down operations in Indiana and move to Mexico.
And now it turns out that an arts-and-crafts business Donnelly's family has owned for generations is capitalizing on some of the very trade policies — and low-paid foreign labor — the senator has denounced.
We can hear the angry accusations: Hypocrite! Two-faced politician! Opportunist!
We also guess the remedy that will be urged upon Donnelly. His family business must immediately divest itself from foreign labor and pledge to hire only U.S. workers. Only then can he say with a straight face that he supports the American economy.
Well, we suggest a different remedy.
Stewart Superior Corp. and its subsidiaries have been shipping thousands of pounds of raw materials to Mexico, where the company has a factory that produces ink pads and other supplies, according to customs records from Panjiva Inc., which tracks American imports and exports. The finished products are then transported back to a company facility in California.
The company, which also has an operation in LaPorte, says on its website that the company's Mexican factory “brings economical, cost competitive manufacturing and product development to our valued customers.”
That's exactly right, and if Stewart Superior replaced its Mexican labor with American workers, the costs of its products would increase, which would mean less business and, therefore, fewer workers, here. A successful company contributes to the economy by offering its output at the most competitive price possible. A company that saddles itself with unnecessary costs might soon be out of business.
It's called “free trade in the global economy.” We could debate its pluses and minuses all day, but the fact is that it is here to stay. Capital will go where it is the easiest to make use of it. Companies that thrive will be the ones that learn how to use it to their advantage.
Our advice to Donnelly is to change his tune and admit that trade is a business, not a social science experiment. And free trade is the key to a more prosperous and therefore less dangerous world.