Posted on 01/31/2004 2:47:00 PM PST by madeinchina
In his State of the Union message, President George W. Bush devoted only a single sentence to international trade: “My administration is promoting free and fair trade to open up new markets for America's entrepreneurs and manufacturers and farmers -- to create jobs for American workers.” With the country facing another record trade deficit around $500 billion, the dollar losing between 20 percent and 40 percent of its value against other major currencies in the past two years, and some 3 million jobs being lost in the manufacturing sector since 1997, the trade issue deserved much greater attention. Indeed, the Bush Administration had unveiled a new Manufacturing Strategy only days earlier. But failure to call for Congressional action to implement the new strategy enhanced perceptions that the White House was not really taking the issue seriously. Consider the use of the empty phrase “free and fair trade.” Not since the Portuguese inaugurated the modern global economy by shooting their way into the Indian Ocean to grab control of the Asian spice trade five centuries ago, has anyone been successful by an adherence to “free and fair trade.” Instead, they have played to win by using every advantage they could find or create. No one wants a “level playing field” if they can gain a “home field advantage” tilted in their favor. Indiana University professor William R. Thompson has spent his career analyzing international competition in all its forms. He has found that “waves of political leadership, order and large-sale violence [are] closely linked to processes of long-term economic growth.” Yet, he has observed that among too many analysts and policymakers “this set of activities remains underappreciated despite its close links to some of the most vicious wars of the past half-millennium and the political-economic restructuring that occurred in the midst and the aftermath of these contests.” This lack of interest is certainly evident among top U.S. decision makers. The idea that trade should be “free” of government involvement or simply made “fair” without concern for the outcome, implies that either trade is of too little consequence to require state supervision – a clearly disingenuous and thus untenable position, or that private “market” results will automatically provide the best outcome for society. It is this last notion about a benevolent “invisible hand” that has paralyzed U.S. policy. It is the wishful thinking of liberalism masquerading as theology. It has two basic tenets. First, the world is basically a harmonious place where conflict can be avoided by a mutually beneficial division of labor that integrates the world. Second, the division of labor can best be managed by private enterprise pursuing its own ends without being held accountable for any larger consequences. The noted realist thinker E. H. Carr demolished the harmony thesis by observing that the division of labor seldom creates a world of equals. Instead, there are “haves” and “have nots” or as foreign policy experts denote them, “satisfied” and “unsatisfied” powers, with the latter group bent on overturning the status quo in order to improve their place in the world. This unequal division is revealed in the classic example used by David Ricardo to teach the principle of comparative advantage: the cloth-wine trade between England and Portugal. In this example, the Portuguese should accept England’s lead in the industrial revolution, which in Ricardo’s day was best represented by the mass production of textile goods, and be content to export wine to pay for imported manufactured items. Portugal should not seek to industrialize itself to compete with England. This lesson quickly earned the title “free trade imperialism” as it would condemn Portugal, or any non-industrial society, to subservience. It should be recalled that one reason the American colonies revolted against England was that they did not like their assigned place in the imperial division of labor. The independent United States became an industrial competitor of the British Empire and eventually surpassed it. Reports from the recent World Economic Forum held in Davos, Switzerland indicate that a host of powers are working in the same way to undermine America’s economic leadership and overthrow its status as the only global superpower. Zhu Min, general manager and economic adviser at the Bank of China, predicted his country will become the main challenger to U.S. economic power, surpassing Japan to become the world’s second largest economy by 2020. Russian Finance Minister Alexei Kudrin said his country “has economic potential comparable with the United States.” Brazil is also making a bid. It led the block of developing nations in opposition to the U.S. agenda, bringing to an impasse the Doha Round World Trade Organization talks. Under left-wing president Luiz Inacio Lula da Silva, Brazil is forging closer ties with China. And India’s leaders are very sensitive to any implication that they are not keeping up with the ambitions of the other rising nation-states. Thompson’s research shows that “commercial challenges are aimed immediately at the leading commercial power.” In today’s case, that means the rich American market is the target, and domestic American firms are to be swept away in the struggle for economic dominance. Private firms are unable to meet this challenge on their own. Domestic American firms cannot stand against overseas rivals backed by their governments, who use all the tools and tactics learned from centuries of trade warfare. Many of the largest “American” firms in leading industries now see themselves as being “transnational” and owing no allegiance to the United States. This means they have been easy converts to the mercantile strategies of the rising states. Washington needs to take action to rein in these global mercenaries and channel their energies back to the advancement of American economic preeminence. In his study The Emergence of the Global Political Economy, Thompson warns of the cost of inaction: “If the declining leader’s deteriorating position accelerates due to its own choices, perceived vulnerability will increase and so, too, will the scope of the challenger’s attack.”
Main reason, India has well educated people who speak English thanks to having been a British Colony. But companies who do the outsourcing are finding out that the Indians are less driven and less productive, so the outsourcing is not working out well. I suspect it won't be long before many of these jobs come back.
The key to keeping a job has always been with the worker. Work hard, do superior work, (don't join a union and ask for things you have not earned,) stay current with the technology of your job, and move with the times when what you make is not selling anymore.
I was laid off twice in the 80's and landed on my feet. I have been an engineer and a teacher. If I had to go back to work now I would think teaching (math and science) would be more in demand.
As far as trading, there is lots of it that is not free and fair at this time. (and lots of businesses in the US are heavily subsidized, which is also not fair). But you don't want the government or the union to "manage" your affairs even though it sounds attractive when Pat Buchanan suggests it. They always end up doing a bad job and selling us out for votes. Work to make trade fair, and recognize that the US worker knows a lot more than the mexican cheap laborer. We sent cables to Mexico to be made fast and cheap and we got stuff that would not work, (not fast or cheap, in fact very expensive.) I do not think we are going to "destroy" our economy or our manufacturing base with the free trade going on today, and I don't think the foreign worker is going to end up beating us. Hell, we can grow soybeans here and ship them to France and sell them cheaper than the French can grow them. Does that sound like trade is not working. BTW, the French won't buy our soybeans, because we would put the French farmer out of business, but the french tarrifs are putting France out of business so its only a matter of time before they will want our products.
As far as trade with these poor countries, it will take time before they can afford to buy a lot of stuff that we have, (like floors in our houses). They will want to buy it maybe in the next generation. I know that does not help today, but it will down the road.
Not only that but more states can expect to go bankrupt from a declining tax base and an increasing demand for social services.
Change third world status to revolution and you may be closer to the real situation.
You'll notice that the unemployment rate has "stabilized", what with this being an election year. That is, if you believe the cooked up numbers that get reported.
Wait until Bush is safely re-elected. You'll see a stampede of work offshore to rival the rats deserting the Titanic.
After that, goodbye Second Amendment. Can't have desperate, hopeless American street scum with access to millions of guns, now. And all courtesy of George W. Bush and his vision of the global village.
No I don't want that either, the less regulations the better. But at the same time no foreign company has a right to sell their products in the US, it's a privilege that we extend to them.
When they use labor for example that is paid far below the American wage rate for the same finished product they end up undercutting our workers. And foreign companies that are subsidized by their government are in a position to undersell an American product. In each of these cases I believe it is our government's right and duty to protect businesses and their employees in this country from the unfair competition.
Up until the nineties that essentially was the policy, so while companies were always free to move to India or wherever, there was no guarantee their products or services might not be penalized if it threatened American jobs. That’s what I would like to return to.
As far as trade with these poor countries, it will take time before they can afford to buy a lot of stuff that we have, (like floors in our houses). They will want to buy it maybe in the next generation. I know that does not help today, but it will down the road.
That seems to be the theory driving free trade policies, which is that the increased jobs in the third world will raise their boats to our level so they can eventually buy American made products. But what is happening is corporations are proving to be interested in cheap labor and nothing else. The same companies who moved to Mexico after NAFTA are now packing up and leaving for even cheaper waters in China. The result is unemployment is rising in Mexico again while their wages have not gone up, they’re still averaging only about $2 an hour.
Corporations are using these trade deals to affect their bottom line and nothing else, which you really can’t blame them for doing. The fault lies with our government since it was obvious that was going to happen, it’s exactly what Perot and Buchanan predicted in 1992. The good news is politicians are catching on and we are slowly returning to limited protectionism. There are bills that will penalize those who outsource in some states, and you’ll probably be finding them in Congress as well. If we don’t take these steps we’re not going to have many jobs left, at least not good paying ones.
Say goodbye to the middle class American, they are a dying breed, killed off by greed and the demorat and Republican party, two sides of the same coin, IMHO.
My corporation tis of thee
Sweet boardroom of liberty
Of thee I sing.
How sad that our nation so desperately needs a third party/real choice and there isn't even a voice in the wilderness.
Nope, I listen to him every day, 3 hours a day. It's refreshing to hear someone on the radio that hasn't drank the liberal socialist lazy union memeber kool aid about the world ending because the Indians or the Chicoms are competing in our economy.
Can you give me an example of how unrestricted or 'free' trade of legal goods is dangerous?
You're the expert.
Thank you for your clear stated position. I am still not convinced that this is a sound policy for the government. (Note the steel tariff that had to be reconsidered, of course that may be making your point since it was the threat of trade sanctions that forced us to relent. )
I believe what is needed to return profitability to our smaller inefficient producers, (those who may be targets of foreign goods) is a return to lower oil prices. I believe cheaper energy in the US is vital to our competitive position. We use machines while poorer countries use human labor.
I do agree with you that countries that practice predatory trade practices, Japan comes to mind, should be delt with in kind. And as I already said, I have only US autos, etc although I am typing on a Toshiba laptop because when I bought US manufacturers did not have what I wanted. In general the practice of trade protectionist practices should be for specific objectives and time limited because otherwise our industries will loose their competitiveness and after that happens, protectionism will drag us down to the European model of high taxes and government provided socialism.
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