Globalization Hits Home
Don't Blame NAFTA: Virginia Must Retrain
Related links:
• How Global Trade and NAFTA Hit a Vital Virginia Business
• Hard-Working Mexican-Americans Flock to the Old Dominion
• South of the Border, an Eager Work Force Waits for Jobs
By James A. Bacon

  The sad demise of the apparel industry in Virginia is a story that's happened before and will happen again. Virginia once had a respectable leather-products industry, but competition from Brazil and other low-wage countries left cobblers barefoot and bereft. By late 1999, only 400 employees remained. Another sector due for a drubbing may be furniture and fixtures, with 22,000 employees. Furniture companies have been slow to modernize, seemingly oblivious to the fact that there's nothing about the labor-intensive task of running jigsaws and sanders that can't be replicated in Indonesia, Brazil or any other country with abundant hardwoods and lower wages.
  So what should Virginians do? Compete with brains, not brawn. That means embracing the values of innovation, flexibility and productivity, all made possible by smarter, more highly skilled employees. It means accepting that dislocations from churning economic forces are inevitable. And it means giving workers the tools Ð the education and training Ð they need to adapt.
  The wrong thing to do is to curse Mexico, NAFTA or the forces of globalization. If the U.S. hadn't opened up its economy to "unfair" competition from low-paying Third World countries, some people argue, we wouldn't have lost so many jobs. The economy may be booming, they say, but the blessings are distributed unevenly. Virginia's least skilled and most vulnerable workers are paying the price for free trade while multinational moguls and Internet gurus skim the profits from new technology and open markets.
  Yes, life is unfair. But protectionism is not the way to make it fair. Do we really want to channel our resources into preserving Virginia's lowest-paid occupations? Would we really be building a better commonwealth if we could somehow salvage those last 400 leather-products jobs — average weekly pay, $358 — before they all migrate to Latin America? Would we truly be helping Virginia's low-income citizens by preserving the remaining 10,000 or so apparel jobs — yielding wages of $360 weekly — before they skip off to Mexico City?
  No. The United States is defining a new role for itself in the world economy: keeping the high productivity, high-paying jobs close to home and shipping the low productivity, low-paying jobs abroad. The way to address the loss of low-wage jobs is not to protect them, but make sure that all Virginians have the education and skills to climb the ladder to high-productivity occupations. Protecting crummy jobs doesn't motivate people to make the sacrifices in time, energy and effort to acquire better ones. Erecting barriers to competition doesn't goad communities into developing the educational and training resources that will help their citizens make that transition. Necessity is the only spur that works.
  The key to boosting living standards is by adopting what Harvard business professor Michael E. Porter terms the "productivity paradigm." Best known for his path breaking work, "The Competitive Advantage of Nations," Porter preaches that economic development depends on productivity, not control over resources, economies of scale, government favors or military might. Fighting over the distribution of wealth is a losing strategy. The United States, its regions and its localities should focus instead on how to make its companies and workers more productive.
  The productivity paradigm, says Porter, encompasses a complex but related set of attitudes: "Innovation is good, competition is good, accountability is good, high regulatory standards are good, investment in capabilities and technology is a necessity, employees are assets." He stresses the advantages of industry "clusters" in which suppliers, customers and members of the supporting infrastructure —particularly in government, education and trade groups — interact to promote innovation and productivity. "Connectivity and networks are essential," continues Porter in a chapter he contributed to Culture Matters: How Values Shape Human Progress. "Education and skills are essential to support more productive work."
  Virginians understand that protectionism leads to stagnation. As I travel around the state, I hear few calls for tariffs, quotas, boycotts or other weapons of trade war. Virginians instinctively grasp the productivity paradigm: They know that businesses, workers and communities must work together to reinvent themselves if they want to reach the next level of economic development. They know they must stress education and training more than ever before.
  In some communities, the emphasis on education is second nature. In others, it's not. In dozens of mill and mining towns across Virginia, high school and college degrees long were luxuries that offered little financial payback. Anyone who wanted a job could quit school in 10th grade and collect a paycheck cutting coal or running a loom. Employers didn't champion education: All they wanted was workers with basic literacy. Why push for higher standards — and higher taxes?
  The spread of the Knowledge Economy has changed that mentality. Even the simplest jobs today require technology skills and aptitudes. Every business executive in every community I've encountered across Virginia recognizes the need to boost the skills of his workers. The question isn't if their community needs to improve educational outcomes, but how to improve them.
  Ingenious experiments — often based on long-distance delivery of educational programs — are taking place in higher education. Virginia's rural counties offer more college-level educational options than ever before. Meanwhile, a commission headed by Secretary of Commerce and Trade Barry DuVal has been wrestling with ways to reallocate nearly $500 million spent annually by federal, state and local governments in Virginia on work force training. With luck, the Gilmore administration will present a significant reform proposal to the General Assembly in the 2001 session.
  The tougher challenge, it seems, is raising the expectations for the K-12 level. Powerful forces — from a teachers guild that resists change to permissive cultural attitudes that obstruct the raising of standards — thwart the effort to boost educational performance in public schools. I don't pretend to know the answers. I suspect it may involve some combination of more money, more accountability and more freedom to experiment. In the end, each community will have to find its own way. But nothing is likely to happen unless business leaders step in and help make it happen.
  A parallel change must take place in the economic development profession. For several decades, economic developers have defined their job as creating jobs and increasing the tax base by recruiting outside industry. Insofar as they thought about creating the conditions for growth, developers focused on "hard" infrastructure — roads, utilities, industrial parks and shell buildings.
Those are still prerequisites, but development today also requires a "soft" infrastructure that includes not only a skilled workforce but unbearably fuzzy stuff like "connectivity and networks."
  Community leaders and economic developers should act as local proponents of the "productivity paradigm" and catalysts for creating the soft infrastructure. An extra $1 million a year spent on teaching best management practices to small manufacturing companies or supporting a local technology council may pay bigger dividends than adding a couple of lanes to 100 yards of Interstate.
  The developing world knows that investing in education and productivity is the quickest way to leapfrog the advanced economies. Through education, India has built a world-class software industry. Through education, Ireland has transformed itself into the fastest-growing economy in Europe. The new president of Mexico has promised to double educational spending south of the border. Clinging to outmoded apparel jobs that Mexico may snub in another 20 years is no way to build Virginia's prosperity. By embracing the creative destruction of the marketplace, we can be the masters of change before it masters us.