Potato Chips vs. Microchips: A False Dichotomy

by Mary Lucia Darst

It doesn’t make any difference whether a country makes computer chips or potato chips!”

                                                                                    ~ attributed to Michael J. Boskin ~

America has a class problem – a snobbery problem to be more specific. A reverse snobbery problem, to refine the definition even more. Boskin served on the Economic Council for President George H.W. Bush, and the meaning of the comment was that any industry that enriches the nation has dignity and is worthy of considerate treatment. However, during the 1992 three-way presidential debateamong the incumbent Bush, Bill Clinton, and Ross Perot, Perot used Boskin’s remark to imply that the president and his administration were out of touch, economically illiterate, and indifferent to the American people. Perot’s argument could be distilled to two principles: free trade is bad because it threatens domestic industry, and manufacturers are more important than everyone else. This mentality is a perfect example of the American reverse snobbery class problem.

The particular point of attack for the first principle was NAFTA, which Perot claimed caused a “giant sucking sound [with jobs leaving the country].” In 1992, Perot argued that without protection of manufacturing the highly skilled and the intellectually gifted would be thrust out into the cold, unappreciative world. Economist Thomas Sowell categorically demonstrated in his book Basic Economicsthat not only did this not occur, but for every low-skilled job that left, at least two medium- to high-skilled jobs appeared in the US thanks to NAFTA, and this is before quantifying the benefits to US farmers (this is not an endorsement of dumping subsidized corn south of the border). Although a 2:1 ratio is quite satisfactory (definitely winning), it hasn’t been good enough for those Americans of the protectionist persuasion, who pivoted from caring about the skilled and the educated to preferring the low-skilled, conditional upon these being in industry.

Even before NAFTA, agriculture was quietly surpassing – if that is the right word for something that has always been a staple of national commerce – manufacturing as the more significant industry. But the national narrative has consistently ignored the contribution of farmers and ranchers, except around election time. In 2003, Patrick Buchanan wrote a review of Boskin’s bookThe Death of Manufacturing in which he excoriated free trade and all associated benefits. The implication to Buchanan’s view was that those who have benefited from the new economy weren’t the right sorts of people; they were too privileged, they already had too much. To understand the socio-cultural factors, we must examine the history of land and property in the Anglophone context.

Throughout history, in all cultures and societies, land has conferred privileged standing upon its owners, elevating them to the rank of the propertied. In English common law, the civil rights of the landed became secure, under the Magna Charta in the 1200s, before those of the un-propertied. The smallest freeholder – yeoman in literary and legal English – had more legal protections and social worth than the average urban merchant, who still had more rights under common law than in many other countries. As Britain slowly industrialized, the cultural dynamic remained the same, with freehold farmers and estate owners receiving preferential social treatment, even as legal protections expanded to include firmly all definitions of property and their owners. Professional designations such as gentleman-farmer began to appear in literature and legal documentation. Land equaled the elite, or at least a chance of elevation to its ranks.

In 1776, both the year of the American Declaration of Independence and publication of Adam Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, the economist lamented that contemporary manufacturers aspired to become “country gentlemen” since their ambitions locked their cash into illiquid assets and reinforced established societal structure. For Smith the concern was that history demonstrated that land-based civilizations quickly developed into societies with owners as entrenched elites, a negative dynamic even if the landowners were wise and conscientious husbands of their properties. Consequently, what Smith wanted was an acceptance of the manufacturer as more important than the agrarian landowner since the former, in theory, made a greater contribution to the economy – a truth in an industrializing society.

Despite Smith’s criticisms of landed-ness as a goal, the gentleman-farmer remained deeply rooted in Anglo-sphere capitalism, even into the present, e.g. Dr. Victor David Hanson, Professor of Classics at Stanford University and also an active farmer with an inherited ranch. As other social metrics slid into place for determining the “elite,” the farmers and landowners adjusted and integrated. But even as the farmers solidified into a privileged class, the manufacturers remained on the fringes; no gentleman-manufacturer appeared as a category, countering the glorified landowner, even less a gentleman-factory worker.

Post-Karl Marx, a new narrative sprang up: this one played on envy and focused on landowners as people with more than everyone else. The Marxian hatred of the propertied reached its logical conclusion in mid-20thcentury China with Mao Tse-Tung’s persecution of landowners as a specific class of people. In the US, this viewpoint led to a media campaign in the late 19thcentury against the “robber barons” of the western cattle and oil ranches. The paradigm called for the urban working-class, many of whom had fled rural life in the first place, to hate the ranchers for the crime of having too many acres. But the media coverage also stoked an ongoing public appetite for stories of the landed elite, ranging from the plantations of the American South (Gone with the Wind) to the more recent British costume dramas (Downton Abbey). All the popular coverage has achieved is to reinforce the message that the landed, with their appearance of security and propertied rootedness, “ain’t like us!”

Today, American farmers and ranchers produce much of the nation’s exports, with goods ranging from staples of wheat and soy to luxuries such as fine wines and heritage hams. And this doesn’t include the landed pursuits such as horse farming or hunting preserves which are agrarian in nature but target a wealthy consumer base. The social range covers the struggling farmer in shabby clothes on an old John Deere to the prosperous rancher using drones to watch over his herds to the classicist preparing a lecture on Grecian poetry while overseeing installation of an automated irrigation system to the Barbour-clad millionaire whose thoroughbred racer is a passion project. The economic importance and egalitarianism of American agriculture is beyond doubt. Yet, in the neo-protectionist winners-versus-losers game, the landed have been selected as the latter.

In the trade tiffs triggered by the rush to protect less competitive American industries, the American farmers and ranchers are caught in the tariff crossfire. The nation’s most important agricultural trading partner is China. No one else is in line to buy half of the entire annual soy crop, nor likely even wants to do so, but anticipation of retaliatory agricultural tariffs by China is already buffeting American farmers as they are unable to anticipate purchasers for already planted crops.If one remembers that many farmers also work on futures, then one understands the difficulty of their situation. On the more snob-value side, American vintners, ham producers, and fruit farmers are already suffering from a 25 percent tariff levied on their goodssince China targeted these products immediately following the US’ institution of steel tariffs.

If an American manufacturing industry came under a 25 percent tariff squeeze, the media and the political apparatus would scream blue murder. Policy-makers would rush in front of microphones and cameras to swear that something will be done. But with reverse snobbery in action, American farmers are not blessed to receive such reactions. They are paying the price for being privileged potato producers in a nation that would rather see itself as makers of microchips. There is also the social class element, aside from the historical resentment of the landed, the sufferings of a vintner are simply less likely to attract popular sympathy than those of a soy farmer, who in turn is still too stable, too privileged in comparison to a low-skilled urban worker, according to the new social pecking order. The losers have been chosen more for social reasons than economic.

Adam Smith, despite his work as foundational in the apotheosis of manufacturing, would not approve. As Oliver Wiseman of CapX wrote in “The false promise of manufacturing,”

Were he around today, Smith would have argued that efforts to promote manufacturing ahead of services introduce distortions that ultimately make us all poorer. According to Smith, “Upon the whole … it is by far the best police [sic] to leave things to their natural course.” […] [T]he government’s focus should be on delivering the stability and openness that creates a broadly business-friendly environment, rather than prioritising one part of the economy over another.

Deindustrialization appears to be part of the “natural course,” but all things tend to be cyclical. The English speaking world may have had a hybrid-type system between industrial and agrarian since the latter retained tremendous cultural cachet even at its lowest points in the historical cycle – the time when industry was more valuable than agriculture – resulting in the manufacturers continuously trailing behind socially. But the economy is not an appropriate place to redress perceived social wrongs, and undercutting one group to the benefit of another is definitely not a recipe for economic or social progress.

Mary Lucia Darst was an intern at the Austrian Economics Center from January to April 2018. She graduated from Columbia University with an MA in History and Literature. In addition to working as a writer and researcher, she is an active classical musician.

The views expressed on AustrianCenter.com are not necessarily those of the Austrian Economics Center.
2018-05-11T13:56:16+00:00

Leave A Comment