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EYE ON THE PIE: Globalization in the fast-food business

May 26, 2008

My buddy Andy hates his name. He suffers because his parents were excessively influenced by "Wheel of Fortune" and named him Andreas Fawlty Towers. After years of teasing, Andy now hates just about everything.

For example, he and I were having lunch at the redesigned "Steak, Shake and Sushi" as he complained about the new menu.

"Foreign foods," he said, groaning. "They take a perfectly fine menu of American classics and add something no one ought to eat. It's bad enough that we have Chinese buffets everywhere and burritos busting out all over, but drive-up sushi? It's a sign of gastronomic cultural decay."

"Get off it," I said. "Americans have adopted and adapted foreign foods for generations. Our eating habits are more diverse than our other behaviors. We'll accept a people's food long before we accept the people themselves."

"It's all because of globalization," Andy said. "Foreign labor making what we ought to be making here. We lower our trade barriers and get flooded with goods from all over the globe. It's an old story. Did you know that Abe Lincoln was in favor of tariffs to protect American jobs?"

"Yes," I answered. "But that was a different time and Lincoln might not take such a stand if he were around today."

"I'd bet Lincoln would see the North American Free Trade Agreement for what it is: a political giveaway to international corporations at the expense of American workers," Andy said.

"You might be surprised," I suggested. "He might have seen globalization for what it truly is: a reduction in the costs of transporting goods, people and information with a corresponding increase in the circle of trade. It's a process as old as civilization."

"I don't care how old it is,"

Andy said, "it's not good for us."

"It is good for us because it lowers the costs of the things we buy and helps us sell into widening markets," I replied.

Andy grunted. I went on.

"Remember the Erie Canal? It made it possible for farmers in Ohio, Indiana and Michigan to ship their grain through to New York City and the world. Farmers in upstate New York hated it. They saw grain from distant states undercutting the higher prices they had enjoyed. They considered the canal a hostile act by their own government, but it actually benefited the state, the nation and the world.

"The interstate highways and federal support for airports did the same after World War II. Jobs that previously would have been in Indiana went south."

"Yes, but those were movements within the United States; it wasn't sending jobs out of America," Andy interjected.

"What do you have against the people of Bangladesh or Chile? China or India? Indonesia, Malaysia or Mexico? You're happy to send church missions to help them build houses, but don't you want them to be competitive citizens of the world? Or are you interested in helping them only if they are poor and dependent on our charity?" I said.

Andy was silent.

"Do you think," I said, "that building trade barriers can really overcome the lower costs of moving goods, people and information? Won't such barriers ultimately hurt American consumers and lead U.S. companies into technological stagnation? Won't other nations retaliate against our exports?"

"Maybe," he answered, "but it would be worth it if we didn't have to eat raw fish."

"Andy," I said, "You don't have to eat or buy anything you don't want. But don't set up barriers to keep me and others from doing what we think is best for us. Let's keep this a country where freedom rules."



Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.
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