Mattel's humiliation
The abject apology last week to China by U.S. toymaker Mattel highlights once again how different the values of the business world are from those of most Americans. Mattel apologized to China because the reputation of China for turning out faulty and dangerous products was further cemented in the American public mind--it's been a weekly horror show of late--when Mattel recalled toys made in China that were colored with poisonous lead paint.
I suspect most Americans view this as analogous to abjectly apologizing to one'sneighbor for having glass windows that his son broke with a carelessly batted ball after having been asked repeatedly not to play ball near your house. Most Americans would confront the neighbor, even if he was their boss, and demand payment for the window, not kow-tow like Mattel. And if that didn't work, punch him in the face or file a lawsuit. But Mattel was far more concerned about angering China's rulers and losing access to China's vast pool of cheap labor than it was in standing up for American values.
Mattel in one sense got what it deserved for closing down its U.S. toy factories and moving the work to the shop floors of China. And it might seem an obvious solution to bring the work back to the U.S., where health and safety requirements are in general taken a lot more seriously than they are in China. If you want to read a good book about the horrors behind the so-called 'China price,' check out "The Coming China Wars" by Peter Navarro.
I've always suspected that greed is the greater reason for closing American factories and moving the work to China. Higher corporate profits and thus bigger bonuses for corporate management are what is driving a lot of this, not so much pure survival or even a desire to bring lower prices to consumers. In other words, I suspect they could survive and thrive by continuing to make things here, but go to China to line their own pockets. I doubt American consumers reap the full benefit of those China prices, especially if one subtracts the added costs of shoddy and dangerous goods from the supposed savings.
Since the corporate world won't self-regulate, the only answer is intervention by the American government to create serious disincentives to moving work to China. That won't happen under George W. Bush, who would probably like to see more U.S. jobs go to China because that would mean greater profits for his corporate buddies. But the Democratic administration that will likely take office in 2009 must take action so all Americans, not just Mattel, don't find themselves kow-towing to Beijing.