China wins.  The NBA and the video game giant Blizzard have joined the Chinese censorship brigade.  Unless laws in the free world change, competition and economies of scale will push many global enterprises to kowtow to the Chinese Communist Party’s censorship demands.  Look for woke capitalism to redefine speech that upsets the Chinese dictatorship as racist or colonialist.

The First Amendment to the United States Constitution supposedly protects freedom of speech from government encroachment.  Unfortunately, international trade and a hypercompetitive global economy means that Americans, living in America, working for American companies can still have their speech rights curtailed by the Chinese Communist Party. 

Any profit-maximizing business earning a fortune from the Chinese market will of course place placating China over respecting the free speech rights of its stakeholders.  China, understanding how capitalism works, knows it holds the whip hand over American firms that desperately want continued access to the Chinese market.  But even worse, in industries dominated by economies of scale, companies willing to sacrifice some profits to not be evil will still end up bending to the Chinese Communist Party because these firms will realize that without China they will die.

Economies of scale arise when bigger is better because as you reach more customers your cost per customer falls.  In an industry with economies of scale, if your competitor sells in China, but you don’t you will have to charge your American customers higher prices than your competitor does.  With economies of scale, the firms that sell in China can often drive out of the American market those that don’t.

The next step in China’s censorship campaign might be to intimidate even those firms that don’t want to do business in China.  Imagine some of your employees speak out in favor of freedom for Hong Kong, Tibet, or the Uighur Muslims, and you don’t think you have anything to fear because you just sell to Americans.  But pretend your success depends on having a good relationship with Apple, Disney, or Nike, all businesses that care vastly more about pleasing the Chinese Communist Party than they do about their relationship with you.  China could lean on your critical partners to pressure you to force your employees to shut up about human rights abuses in China.

I fear what China might do to my industry:  academia.  Many colleges get lots of revenue from “full pay” Chinese students—those that don’t receive financial aid.  What happens if China tells a college to silence some annoying anti-Chinese professor or risk losing all its Chinese students?  China will likely be smart enough to not start with financially strong institutions, such as Smith College where I teach, but rather will threaten schools on the margin of viability. 

J.D. Vance wrote “American elites promised that liberalizing trade with China would allow us to export our democratic ideals, but they were wrong in precisely the opposite direction: we imported their values along with their cheap consumer goods.”  Under the current system, where Americans have weak freedom of speech rights via their employers, Vance is right.

The identity politics left has already made it socially acceptable for firms to fire employees for thought crimes.  A white Google employee who said something that his Asian co-workers interpreted as racist against them would reasonably fear for his job.  It’s not much of a leap to say that offending a billion Chinese citizens should also be grounds for dismissal.

The United States should extend anti-discrimination laws to cover political speech.  Just as an employee in the US can’t be legally fired for her religion or skin color, I propose that it should also be unlawful to terminate her employment because of any political comments she makes.

If the American government fails to protect our speech from encroachment by the Chinese Communist Party, Americans should act without relying on government.  China can cut off access to a small number of American firms, but it can’t reasonably boycott all of them.  If a huge number of US employees speak out in favor of freedom for Hong Kong, China wouldn’t be able to make an example of all their companies unless China was willing to significantly harm its economy.

James D. Miller is a professor of economics at Smith College.  Follow him on Twitter at @JimDMiller.