You OCCASIONALLY have to fight a trade war. whether you want to or not.
If the arabs are forcing the oil price low to drive us oil companies out of business then you better fight back.
Because if they success then oil price will go back higher than they ever were.
In Reagans case, they Japanese were deliberately undecurtting us electronics companies and trying (and pretty much succeedng) in driving us electronics companies out of business
The reason US prices were so high, though, was because of UNIONS
“The reason US prices were so high, though, was because of UNIONS”
Unions do not explain the loss of US manufacturing jobs in the 1990’s and 2000’s. Take a drive through the southeastern United States and look at the thousands of shuttered factories once employing hundreds of thousands of NONUNION workers. The industrial South is just as decimated as the industrial North and Midwest. Consider also, when production and jobs went offshore companies did not lower prices. The experience of the 1990’s shows CEO’s used the higher profit margins to buy back stock or make acquisitions in an effort to drive stock prices higher. I might add Goldman Sachs, JP Morgan, and the other “too big to fail” Wall Street banks were willing collaborators in the offshoring of US manufacturing and the stock market speculation made possible by the cash flows derived from offshoring.
Labor cost was a low percentage of the cost of most products offshored over the past 25 years. Due to the higher productivity of the American worker, and the cost of transporting goods from Asia to the US, the real cost advantage in moving offshore was only 10-15% for most manufactured items.
Consider that by the 1990’s the US factories built after WWII in the 1950’s, 1960’s, and 1970’s needed modernization. US multinational companies were going to have to spend millions of dollars replacing aging equipment and modern production control systems. The lower of tariffs, lobbied for by Wall Street and the multinationals, occurred at the same time this reinvestment in modernizing America’s manufacturing infrastructure was needed. Coincidental? Once the tariffs were lowered (NAFTA, WTO, CAFTA), US investment dollars poured into setting up supply chains in China and other countries. American workers were left with obsolete factories that couldn’t compete with highly productive new equipment and slave wages. It was a double whammy.
Why did US corporations in mass lobby for zero tariffs and once they were rammed through Congress shift investment dollars needed to modernize US factories offshore? Ask Wall Street and the politicians serving Wall Street. Follow the money, the decision makers became incredibly wealthy while the middle class American worker took in on the chin.
Having lived through the period I recall the arguments that free trade would provide great benefits to the US economy and the US worker. Millions of high paying “new economy” jobs would be created in the USA as a result of free trade. Twenty-five years later we haven’t seen those “millions” of new jobs. Despite the miserable results from previous free trade agreements we are now being told by both parties the TPP will bring incredible benefits to US companies and US workers.
A few questions:
1) Where are the studies demonstrating quantitatively the lowering of tariffs and offshoring of manufacturing benefited the US economy and the US worker? We have 25 years of experience with NAFTA and the other agreements. What was the net benefit?
2) Why does any free trade agreement require 1500 pages (NAFTA) or 5400 pages (TPP) to explain and document? Since when does “freedom” require hundreds of thousands of words to explain? Could it be these thousands of pages merely describe the exclusions, special benefits, payoffs, and privileges being extended to the companies, countries, and other players who have been designated to benefit from the agreements?