I lived for eight years in the Solomon Islands, 1985 to 1991 and 2007 to 2009. The Solomons are a nation of about three hundred islands just south of the Equator. The only thing most Americans have heard of there is Guadalcanal, because it was an island that was the site of World War II battles.
The Solomon Islands are in the upper right corner, and Australia at the lower left. The Solomons is the least urbanized of the Pacific island nations. The population is around a half million. The capital city, Honiara, is about sixty thousand. The second largest city is about seven thousand … and it drops quickly from there. The Solomons is very poor, being classed by the UN as an “LDC”, a Least Developed Country.
It’s also a curious country for another reason. When I first moved there I was running a rural development agency working with village people in local business development. I was surprised at how difficult it was to teach business concepts. I’d worked in rural Africa and Central and South America, so I had a sense of how rapidly people picked up concepts.
What I finally realized was that not one person in any of the business classes that I taught in the Solomons had anyone among their families or friends who was in business. I was used to Africa, where the guy patching the cooking pots for money or trade had a great-great-grandfather who did the same thing, trading with the Arabs or someone else. But in the Solomons, there were no second-generation business people of any kind. Until World War II there was little contact with the outside world, because it was a hotbed of malaria, one of those places called the “white man’s grave”. No lie. I had malaria three times, plus one recurrence. But I digress.
As a result of only recently joining the modern world, the country is in the earliest stages of economic development. The work force is generally uneducated, inexperienced, and unused to the work environment. Don’t get me wrong, they are great people, I have many long-time friends there. But it is hard to find experienced workers, there is so little opportunity for them to learn how to do a job, any job.
One of the advantages of living in a small poor island nation is that the economics are very visible and simple. Let me recount for you the story of the nail mill in Honiara, the capital of the Solomon Islands. Of course, it was the only nail mill in the country. Simple economy.
Now, the nails used in carpentry and construction are called “wire nails”. This is because they are manufactured from a long coil of wire. A relatively simple machine is loaded with a coil of wire. The machine unrolls and straightens the wire, cuts it to length with a point, hits it with a hydraulic or mechanical hammer to forge the head, and spits it out.
When I got there, Honiara had a nail mill. It wasn’t much. Some melanin-deficient guy from England or somewhere had acquired some old clapped-out piece of nail-making machinery. Not the most efficient, but he could keep it working. He had a few employees. In an economy where jobs are nearly non-existent, this was huge.
Like I say, it wasn’t much. But it was one of the very few manufacturing plants in the entire country. It was a model of what might some day be possible. It was a place people could go and start to understand the mysteries of manufacturing and how it can transform an economy.
Now, as you might imagine, the factory was horribly inefficient compared to say some gleaming new plant in Malaysia turning out twelve tonnes of nails per shift with a work-force of seventeen including janitors. There was no way it could compete with that plant. Heck, it wasn’t even as efficient as this low-end modern plant:
But the nail mill stayed alive because back then, the Solomons did what every rich country did at that same stage in its economic development.
It protected its nascent developing industries by imposing tariffs to make local production economically competitive.
And things were going swimmingly … until the leaders of the Solomons got infected with the “free trade” sickness, and they signed on to an Australia-led free-trade scheme that required them to end their protective tariffs on a host of things … including nails.
And that was the end of the nail mill … and the end of most manufacturing in the Solomon Islands as well. They desperately need the things that a local manufacturing economy could bring them … but there are very few things that they could manufacture competitively at the current level of their unskilled workforce and inefficient economy.
So “free-trade” has condemned the Solomon Islands to be nothing more in the world economy than a perpetual supplier of raw materials and agricultural products—lumber, fish, palm oil, some minerals, and the like.
Rich countries got rich by protecting their nascent manufacturing sector from foreign competition. And poor countries stay poor because of free trade.
To bring this story back to the US, sadly free trade has been as destructive to American manufacturing as it has to Solomons manufacturing. Because semi-skilled labor is available for $3 per hour in Mexico and other countries, we’ve exported our manufacturing sector overseas. To reverse this, we need to end this free trade madness and protect our own manufacturing sector.
There is no reason why my neighbor should have to compete for a job with a guy who is willing to work for a few pennies and a dry place to sleep. My neighbor will never win that competition.
Proponents of free trade point out correctly that this will make some things more expensive. But which one is better—stuff is cheaper but the factory in your town shut down and you’re out of work, or stuff is more expensive and you still have a job at the factory?
The costs of our long free-trade experiment have been disastrous for everyone except for the corporations, which have benefitted greatly from operating where they never heard of safety regulations or workmen’s compensation insurance … it’s time to return to trade barriers to bring our own (and the Solomons) manufacturing sectors back to life.
Here, the constellation Orion has just hoisted himself out of the trees, his bright dog Sirius will be following soon. It’s cold for this microclimate, about 44°F (7°C), and the air is crisp and clear after the recent storms.
My best wishes to all,
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