Nike Founder Phil Knight is Right about Free Trade and Minimum Wage Law

Mark Skousen
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Posted: Jun 21, 2016 12:01 AM
Nike Founder Phil Knight is Right about Free Trade and Minimum Wage Law

“International trade agreements benefit both nations always.”

“The only way to end poverty is to create entry-level jobs. Lots of them.”

I just finished listening to Nike founder Phil Knight’s memoir, “Shoe Dog,” and found it riveting.

I grew up in Portland, Oregon, so I loved the story of entrepreneurship involving a local company making it to the bigtime even more. In Portland, we always seemed to have envy fever with Seattle just 173 miles away on Interstate 5, with the bigger city famous for building Boeing airplanes.

Portland comparatively always was the little brother. Today, Seattle also is famous for being the corporate headquarters of Starbucks and Microsoft. Now, Portland at least has Nike! (But that’s still about it among major corporate headquarters.)

At the end of his autobiography, Knight talks a little politics. He is deeply concerned about the anti-trade mentality now promoted by all of the remaining major presidential candidates — Donald Trump, Bernie Sanders and even Hillary Clinton. (Hillary Clinton’s remarks about trade have shown that she is no Bill Clinton, who signed North American Free Trade Agreement (NAFTA) into law on December 8, 1993.)

“I do believe that international trade agreements benefit both nations, always,” Knight said, pointing to NAFTA. “Everybody’s railing on NAFTA now, but since 1996, when we signed NAFTA, the gross national product of the United States has risen three times. Do we really think it would have gone up more than that if we didn’t have trade agreements?”

Knight also talks about the time Nike tried to raise wages in one of its Asian factories (I think it was in Indonesia) and was reprimanded by government officials, saying “We can’t have shoe makers making more than medical doctors in our country! The people would riot!”

Later in the book, he makes an important observation in the fight over the minimum wage: “The only way to end poverty is to create entry-level jobs. Lots of them.”

That’s the problem with the minimum wage law. It discourages entry-level jobs. Minimum-wage workers typically voice support for receiving increased pay but the reality is that employers may well need to cut jobs to keep their expenses under control or move out of municipalities that enact laws calling for wages that may prove unaffordable for small businesses.