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Economics & Research Blog

The Trade Poison Pen Letter: A Response

The WhatTheyThink folks got the equivalent of a poison pen letter from someone that went like this,

By Dr. Joe Webb
Published: November 10, 2007

The WhatTheyThink folks got the equivalent of a poison pen letter from someone that went like this, with a request to forward it to an industry executive; I happened to think it was rather sad, but we produce it here, as originally received, bad spelling and grammar included with sender name, and the name of its recipient, withheld:

“For years people like you have suported unfair trade, Your paper comes form oversea's then you sell your final product to Americans, Why can't your buy your paper is the U.S. your a bastard and crook, you and a lot of others will pay dearly one day, you have sold out this great country for to long now. Move to China because your not an American in my eyes, your just a corporate pig.”

I certainly hope the writer enjoys that nice cup of American coffee every morning, and has one of those American-grown bananas every day to keep his potassium up. He'd better not be caught eating an English Muffin or having Canadian bacon, either.

It is still amazing how few of the general public actually understand the importance of trade, in all jobs, and in all industries, and as a consumer. One of the workers in my office was once complaining about trade, and then I read off a list of our clients, and it was quickly apparent that more than three-quarters of our work was coming from overseas headquarters of international companies. So even her job was being paid for by trade. Boy, was her family surprised, and the topic never came up again at home or in the office. The same thing happened to a product manager I used to work with at Agfa; his elderly parents complained about those terrible imports, even though he was employed, with thousands of others, working for one of those very companies, and they had never thought of it that way.

This person is obviously a disgruntled paper industry worker. Since 2000, the commercial printing industry's volume is down on an annualized basis of $30 billion dollars. That's about $8 billion dollars worth of annual paper volume in there, perhaps more, that has disappeared mainly because of the Internet. Compare that to $2.7 billion of paper imports from China for 2007 (my estimate for the full year) and $1.2 billion that we will export to China, for a difference of $1.5 billion in net imports. Hmmmm..... $8 billion seems like a lot more than $1.5 billion. In fact, he should really be mad at Canada. We import $12 billion in paper from our northern neighbors. It's time to stop listening to Gordon Lightfoot records, watching William Shatner TV shows, and laughing at John Candy movies in protest of the evil Canadian imports.

I still find it incomprehensible that thousands of jobs could disappear from the printing industry because of digital communications, yet no one says a word. But if imports from China go up (and total imports even stay roughly the same!) everyone seems to have a fit.

More importantly, the paper industry did not help out the printing industry in that time of digital attack. Even recently, paper prices have been increasing as the costs of the electronic competitors of print are continuously going down. In the 1990s, I was in several meetings where it was condescendingly explained to me that the paper industry would not be addressing digital printing or any of those things because (at that time) the annual volume represented just one day of production. One of the reasons digital printing, one of the best weapons against offshore competition, had such a tough time gaining traction was the limited number of paper grades and paper formulations that would work in digital devices. Believe me, I understand that the paper industry does the best it can with the kinds of long-term capital investment profile that it has, much like trying to turn an aircraft carrier around in a narrow river, but the paper industry seemed ill-prepared for assisting the printing industry with the problems that new media competition offered.

In the case of the commercial printing industry, using paper from China and other countries has become, for many printers, essential to remain competitive in a market of declining print budgets shared with electronic media communications. Depriving the printers of those alternatives negatively affects those workers and allows alternative media to be unchallenged. It's that $30 billion in lost printing that's the issue, and the $8 billion less paper that's not used every year, not the net imports from China of $1.5 billion.

As for dispelling the myths of trade, I recommend some of these online resources. The classic “I, Pencil” by Leonard Read is more than fifty years old, and still essential reading. Murray Rothbard's “Protectionism and Prosperity” was written in 1986 when fear of Japan was rampant (before they made all of those really bad real estate deals that helped shatter the myth for them). “Basic Economics” by Thomas Sowell is always a good choice since it is plainly written and intended for non-economists. “The Concise Guide to Economics” is available online for free. It lives up to its name.

And as far as the writer's problems spelling, those are understandable. After all, English is an imported language.

Dr. Joe Webb is one of the graphic arts industry's best-known consultants, forecasters, and commentators. He is the director of WhatTheyThink's Economics and Research Center.



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