Professor Jonathan R.T. Hughes used to brag about the way his tweed jacket smelled when it got wet.
”People who sit around me at football games, when it rains, say it stinks,” he once told his economics class at Northwestern University. ”They don`t know the smell of quality.”
The professor`s favorite jacket was imported from the Shetland Islands. For centuries, craftsmen there have used a special grade of wool that retains much of the body oil of their prized sheep. The finished product feels like cashmere but wears like iron.
Lately I`ve been thinking a lot about professor Hughes and his smelly jacket.
Appointed last year to a prestigious endowed chair at Northwestern`s Department of Economics, Hughes is a first-rate economic historian, an engaging speaker and a longtime advocate of free trade. Not that our class cared much about trade issues in the winter of `68; the foreign-policy question that mattered to draft-eligibles such as myself was the blood bath in Southeastern Asia. Japanese cars were beginning to appear on American streets then, and nobody felt threatened by those boxy little Toyota Coronas.
The war ended, of course, but the Japanese cars kept coming. They kept getting better, too, and eventually grabbed nearly a third of America`s automobile market. Japanese cars and car parts account for three-quarters of our nasty $41 billion trade deficit with that dynamo.
Many say Japanese competition is killing General Motors, Ford and Chrysler. Figures due out this month probably will show that the Big Three lost a combined $5 billion last year. Once the symbol of all that was right about corporate America, GM has announced plans to close 21 plants and lay off 74,000 workers.
Predictably, we find ourselves surrounded by instant experts on foreign trade.
One prominent congressional leader says the recession was ”made in Japan.” Senior Bush administration officials, heretofore committed to free trade, are suggesting that Japanese imports are part of the problem. The five Democratic presidential contenders are trying to score points on the issue. A shrill ”Frontline” documentary that aired last month on public television all but convicted the Japanese of ”predatory capitalism,” to wit: the
”dumping,” or underpricing, of exports in a coordinated national strategy to destroy U.S. competition and grab our markets.
More Top Picks Best Pillows For Shoulder And Arm Pain
Some of these accusations have a ring of truth. Many of Japan`s domestic markets are closed to us. Japan Inc. presents itself to outsiders as an impenetrable web of insider relationships and exclusionary customs. Here in the States, their transplanted industries tend to buy supplies from Japanese firms in their corporate webs, or keiretsu.
Little wonder that American public opinion seems to be shifting to protecting our automobile makers-and other industries threatened by the Japanese-by imposing higher tariffs and import quotas.
Lately I`ve been tempted to join that chorus. It`s human nature to want to do something, anything, to stop the economic bleeding that afflicts places such as Flint, Ypsilanti, Youngstown and Chicago Heights.
Then I remember professor Hughes and the parable of the smelly jacket.
It was his way of explaining that some countries make certain things better than we do in the U.S. Does it make sense, he asked us sophomores of
`68, to slap tariffs on handmade Shetland woolens to force Americans to buy the stuff churned out by our textile mills?
I called Jon Hughes last week to see whether he had changed his mind in the intervening 24 years, what with our growing trade deficit and unemployment crisis. He has not.
”Protection is no free lunch,” he shot back, reminding me why I never cut his lectures.
”When you`re forced to pay $120 for something you could import for $100, what you`re doing, as a consumer, is subsidizing certain producers. That`s $20 out of your pocket; $20 you could have spent on something else.”
In the case of autos, Hughes argues, the Big Three doesn`t deserve such a subsidy. ”They`re still using 19th Century technologies and methods. They have hostile, adversarial labor practices. Cars are assembled without any regard for the consumer at all.”
Hughes leveled his harshest criticism at top management. ”You`re never going to compete with anybody with management like they have at General Motors.” He said GM Chairman Robert Stempel`s $2 million-plus annual salary amounted to ”looting the company.”
The same goes for Chrysler Chairman Lee Iacocca, who makes twice as much as Stempel and who Hughes called ”a shakedown artist.”
As for Ford, Hughes railed about having bought a new 1989 Taurus, a car he traded in for a Toyota Camry after one year of repeated problems with a defective head gasket, a leaky trunk and a constantly squeaking rocker panel. ”What we`ve got to do,” said Hughes, ”is make products that the world is willing to pay for. We`ve got to invest in the best technology. We`ve got to invest our workers with the education and good will to use that
technology.”
Smells like quality advice to me.