The Wisdom of the Marketplace

I understand as well as anyone the impulsive, almost instinctive desire to want to use government – in the form or tariffs, import restrictions, subsidies, legislation, etc. – to try to limit the impact of cheap (and often subsidized) foreign competition and the incursion of (often below market-value) offshore products.

But time and time again, I’ve also seen that if left to operate on its own (and given just a modicum of patience), the market will invariably do naturally what so many knee-jerk types would cry out for our often ham-fisted federal government to do by artificial means.  What’s more what it does will always be better for those concerned in the long run.

Case in point; this week I read about yet another textile mill opening up in the Carolinas, once the cradle of U.S. textile manufacturing (and, therefore, world textile manufacturing).  The owner?  Some jingoistic, flag-waving, Made-in-the-USA investment group?  A bunch of private-equity Tar Heels or Gamecocks with emotional ties to the area?

Nope.  The company opening the mill is a China-based manufacturer named Keer, an offshore entity that looked at Indian Land, South Carolina, its closeness to the U.S. market, the extent to which its workforce’s salary demands had leveled off after years of outsourcing and foreign competition, its vast resources, and, just as important, the growing labor, energy and transportation costs it was experiencing stateside, and came to the conclusion it would be an ideal spot to open a textile mill (and add about 500 new full time jobs to its suddenly lean, hungry and motivated local economy).

The lesson?  The market got us where we needed to go – exactly where we needed to go – and did it without government intervention.

And while there was clearly a lean period for many locals, and there were (as there always will be) unintended victims of the ebb and flow of market dynamics, look at the incredible benefits that were realized in the process.  Workers in the area, many of them still trained and still job-ready, are now much more in tune to the reality of the global marketplace, more level-headed in their compensation demands, and more willing to partner with ownership and/or management to ward off future losses of jobs and plant closings.

What’s more, having gone through what they’ve gone through, those workers, along with their managers and elected officials, are now collectively even further ahead of their Chinese counterparts on what you might call the macro-economic learning curve.

Where once had been, at least to some extent, the kind of collective myopic, short-term and me-first thinking that one finds when people grow complacent, is now a far more big-picture understanding of global market dynamics and how such dynamics can impact a local economy, a wisdom that will only stand to benefit the men and women of Indian Land and positively impact their future decision-making, strategizing and economic planning.

Look, I am not one of those “ready-fire-aim” anti-government whack jobs.  In fact, I see a much greater role for a benign government in America than do many of my friends and colleagues.  But honesty compels me to admit that time and time again I’ve seen government prove itself to be ill equipped to lead economic prosperity and to protect companies (and its citizens) from a force more dynamic and relentless than it will ever be.

Because, believe me, as the little community of Indian Land, South Carolina showed us yet again, government is not only less capable than the marketplace in shaping the future, it’s also not nearly as smart.

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