Posted on 01/01/2004 3:18:21 PM PST by XBob
New Trade Figures Explode Standard Globalization Myths Alan Tonelson Wednesday, March 05, 2003
The year-end 2002 trade figures released in late February were bad enough from an aggregate standpoint. As discussed in last week’s column (“U.S. Trade Deficit Endangers the American Economy”), exports were down, imports were up, the trade deficit grew by more than 20 percent, America’s international debts mounted, and the nation drew that much closer to a dollar crisis.
Disturbingly, the story told by the trade figures’ makeup is at least as bad. Sweating these details also punctures several seductive myths about U.S. trade policy and performance.
For example, the recent run-up in oil prices understandably has focused national attention on oil imports. Even some business reporters have wondered whether America’s trade problems were really, or mainly, an oil import problems.
Obviously, America imports a lot of oil, and buys entirely too much of it from geographically remote, anti-American parts of the world like the Persian Gulf. But the $103.58 billion worth of U.S. oil imports in 2002 were barely above 2001 levels. And oil actually fell as a share of total U.S. goods imports, from 9.1 percent to 8.9 percent. By contrast, Americans put much of this imported oil into the $114 billion worth of automobiles they purchased from abroad last year.
Trade policy apologists often try to explain away bloated U.S. imports and deficit figures by touting the economic value of imports. Some harp on the benefits to consumers of less expensive and more varied goods (at least, to consumers that still have jobs or whose wages and benefits have not been depressed by foreign competition).
The more sophisticated globalization cheerleaders contend that imports can make U.S. producers more competitive. As argued by the Bush administration’s latest annual Trade Policy Agenda report, “U.S. manufacturers rely on imported inputs to production to stay competitive with foreign producers.”
These claims have some merit in principle. Yet the 2002 trade figures show that nearly all the increase in U.S. imports came in consumer goods side. U.S. imports of industrial supplies increased only 1.7 percent, and purchases of foreign capital goods actually fell by 4.7 percent. Consumer goods imports jumped 8.2 percent, however, and imports of cars rose 6.95 percent.
Similar patterns hold going back a decade. Since 1992 (without adjusting for inflation, which has been low for the last decade), capital goods imports have risen by just under 112 percent, industrial supplies imports by 98 percent, and non-auto consumer goods by more than 150 percent.
At the same time, that big boost to U.S. manufacturing competitiveness from all these low-cost intermediate products is nowhere to be seen in the trade figures. Since 1992, U.S. goods exports have increased by only 48.2 percent, and, of course, the U.S. goods deficit has exploded. Policy-makers should keep these realities in mind the next time groups of U.S. steel-using companies complain about the unaffordable steel prices allegedly created by the Bush administration’s 2002 steel tariffs.
Trade policy apologists also like to whine about the richly valued U.S. dollar, which they insist prices Made-in-the-U.S.A. goods out of both foreign and domestic markets. The National Association of Manufacturers has been loudest in blaming exchange rates for manufacturing’s trade woes. The group has conveniently ignored the one-way, giveaway, NAFTA-like trade agreements that have sent so many export-oriented U.S. production jobs offshore – most of them to factories owned by NAM’s multinational member.
The 2002 trade figures, however, put the lie to NAM’s exchange-rate obsession. For example, America’s goods trade deficit with the countries that have adopted the Euro soared by 54 percent last year, to $82.37 billion. Yet the dollar actually declined by 13.5 percent of its value against the Euro during this period.
Finally, the 2002 trade figures bang another nail into the coffin of the argument that the United States mainly exports high-tech products and imports low-tech products – thereby strengthening domestic employment in the world’s best-paying industries. In 2002, the United States ran a trade deficit of $17.47 billion in products that Washington officially defines as advanced technology goods. In 2001, the nation ran a surplus in these sectors of $4.45 billion – lower than the $5.35 billion surplus of 2000, but still in the black.
Like Madison Avenue hucksters, globalization apologists are endlessly inventive. But with the 2002 trade figures available for all to see, their supply of excuses and rationalizations must be running low. As for the public’s patience with them – that should be totally exhausted.
-------------------------------------------------------------------------------- Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
"Finally, the 2002 trade figures bang another nail into the coffin of the argument that the United States mainly exports high-tech products and imports low-tech products – thereby strengthening domestic employment in the world’s best-paying industries. In 2002, the United States ran a trade deficit of $17.47 billion in products that Washington officially defines as advanced technology goods. In 2001, the nation ran a surplus in these sectors of $4.45 billion – lower than the $5.35 billion surplus of 2000, but still in the black."
With hatred of business taught in our schools, this is not likely to occur soon.
They'd better start teaching a hatred of indoor plumbing and electricity too.
I am in business and I have never stolen. Perhaps you are thinking of some other culture?
You have never stolen. You are human. Therefore no humans steal.Wonderful! What Ivy League College are you a product of?
Well gee, I suppose we could forego all labor laws - ya know, back to the 14hr, 6 day work week...
Hell we could even let the companies keep the folks locked in the factories, like they do in China.
This would reduce the nations standard of living...but we are heading that way anyway. Might as well accelerate it.
The question is, do we want to maintain manufacturing surpremacy?
Thats a good question.
Even though unemployed US factory workers are unhappy, a lot of other people are happy the factories are gone.
My question... which manufacturing capabilities do we need to keep in the US, in order to remain strong and secure?
Are they investing in America, like the Japanese did a decade ago?
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