I recently returned from an enjoyable week in Tuscany, the Italian region famous for wine, history, and the ubiquitous hill towns that dot the rolling landscape. Before the formation of the modern country of Italy in the nineteenth century, the Italian peninsula was a collection of city-states that were often at war with one another, and the small hill towns were often caught in a tug-of-war between the dominant powers in their region.
In Tuscany, the two biggest powers were Florence and Siena, both vying with the other for regional dominance until Siena lost two-thirds of it’s population to the plague, thus cementing Florentine dominance in the ensuing years.
The many hill towns throughout Tuscany were built at high elevations for obvious defensive reasons. It enabled people to live in a protective enclave, observe their surroundings for many miles, and hunker down in the event of a siege. During one of their many wars, Florence besieged Siena by catapulting dung and donkeys over Sienese walls.
And that visual is as good a segue into today’s presidential race as I can think of.
As I drove along the Italian countryside, I found myself wondering about how far humans have evolved during the intervening centuries. On the face of it, pretty far. However now, as well as then, there is a natural inclination to retreat and strengthen defensive positions during times of uncertainty. But what proved effective in the fourteenth century won’t work as well in the twenty-first.
Two current hot-button issues which demonstrate how the world is changing are trade and immigration. Despite the overwhelming consensus among economists that trade agreements such as NAFTA have been a net benefit to most Americans, those benefits are diffuse (shared across many and difficult to identify) while their costs are concentrated (falling on certain industries, easier to identify due to high-profile plant closings). The fact that the free-trade Republican party has nominated a candidate who has focused much of his considerable bombast on NAFTA and the uncompleted TPP agreements is an indicator of the degree to which up is down and down is up in the 2016 race.
All of this obscures the fact that the manufacturing jobs leaving the US are not coming back, and it’s not because of trade agreements. Its because all over the world, companies are learning how to produce more goods with less cost – something we all demand as consumers when we shop.
According to Geoff Colvin from Fortune Magazine, “today the U.S. produces manufactured goods worth 78% more in constant dollars than we produced in 1979. That is, we produce 78% more stuff with 37% fewer workers. This is a global phenomenon. Everywhere on earth, every day, business people figure out how to make more stuff with fewer workers. That trend isn’t going to reverse.”
In effect, the manufacturing industry is going through a version of what farmers went through years ago. Only 2% of today’s US population live on farms, yet that small population produces much more food than the larger farming populations of decades past.
Furthermore, the ties that connect societies are increasingly digital – something a Tuscan town didn’t have to consider in the middle ages. Mobile phones, ecommerce, and a host of new service concepts that would have sounded far fetched even ten years ago are increasingly the norm. And the only thing we know for certain about all this change is that it will never change back to how things used to be.
None of this is to say that the US shouldn’t have reasonable trade policies, nor that it shouldn’t enforce the policies it has. It merely reminds us that retreating behind walls doesn’t change what is happening around those walls. The population of Tuscan hill towns eventually plummeted because all the interesting action was happening outside the walls and the young people chose to move away.
To the rest of the world, America is young, optimistic, energetic and outward facing. Spend any amount of time in a world city and you’ll eventually bump into an American running around trying to sell or create something. Back at home, our strength is tied in part to our ability to absorb new people and new ideas. These are sources of our competitive advantage.
Of course, enjoying a glass of Chianti while marveling at the beauty of one of these towns is a great experience. But all vacations must come to an end, and you eventually head for the airport and rejoin the world we live in today, rather than remaining in the world of centuries ago.
Published October 9, 2016
