Economic Rivals Given “Go-Ahead” to Destroy Rest of Domestic Manufacturing by Bush’s Stand on Trade

Trade Alert.us ^ | 1/30/04 | William Hawkins

[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.”

[ClintonBeGone]

How is it that the global economy is working without the type of free trade you advocate?

It's not whether we should have free trade, its whether we should have free-er trade. Certainly you understand my post where I explained it's (impediments to free trade) degrees of evil??

[1rudeboy]

I'm looking for a "long term trend," Einstein. That is the language you used.

[jpsb]

yea, what is happening is labor, skilled and unskilled is being turned into a commodity. And like any other commodity, cheap wins every time. So if American labor is going to compete in global market it's got to become as cheap as Mexican or Chicom labor. Not a good thing if you are an American wage earner. But until or unless or trade policies are changed we can look forward to a declining standard of living. Already the blue collar workers have for the most part been reduced to proverty, now it is time to do the same to the white collar middle class worker.

One good thing is the American middle class aprears to be showing signs that it understands what is happening. An once fuly aware I believe the workers will toss out of office anyone and everyone that spouts the free trade BS line.

[1rudeboy]

And again, you confuse a decline in the rate of increase as a decline in the rate.

[sarcasm]

As you have previously admitted, real wages are lower now than they were in 1975.

[ClintonBeGone]

Really? If the citizens pay taxes on their income without deducting their living expenses, why the corporations deduct their costs? They should be taxed on the gross revenue same way as everyone else.

Sure, so what income your company pays you (if you actually have a job and are not collecting on some government program) is in after tax dollars. There will be fewer dollars for labor wages and you'll either have to work harder or get a new job.

Are you now getting a better understanding of why it is so dangerous to have people with your mindset anywhere near the levers of public policy?

[e_castillo]

What jobs have been exported?

Why don't you take a look at the US Aeorspace industry? Airbus and Eurocopter are good places to start. The French goverment has targeted the US in both these areas and has won the battle. We just haven't realized it yet.

[Viva Le Dissention]

That Communist China still imprisons Christians for being Christian and uses forced prison labor doesn't seem to bother anyone in the Bush administration, or any of the free-traitors here.

It's not that it doesn't bother us; the issue, though, is that capitalism and freedom move hand-in-hand. That is to say, you cannot have a capitalist society that is not free, and you cannot have a free society that is not capitalist.

As China rumbles on its painfully slow transition to capitalism, notice that politically it is also becoming more free. Just in the past two weeks, for instance, China announced that it was undergoing sweeping reform to its judicial system to afford more due process protections to those charged with a capital offense.

And in a story just released today, we see major political activism coming from China, as Chinese Reformers Petition for Review of Subversion Law (NYT 1 Feb http://www.nytimes.com/2004/02/01/international/asia/01CHIN.html?ex=1076302800&en=5bffbb51ad02eab9&ei=5040&partner=MOREOVER)

Capitalism spurs this change. As China becomes more capitalist, it will become more free.

[Reaganwuzthebest]

I'm looking for a "long term trend," Einstein. That is the language you used.

Can you show that the data on #13 is false? It may be only three years but the trend has been going on since the mid-nineties. I've posted reputable links in the past to demonstrate that but you dismissed them. If you care to present facts that prove real wages are rising I'd like to see them.

[1rudeboy]

Nice try. The single study you've found (by two Canadian professors arguing for an increase in the minimum wage) shows a fall in wages for those with less than a college education. Please try to be accurate.

[sarcasm]

TABLE 2A
Real Hourly Wages, By Education* Level, All Workers 18-64, 1973-97
(1997 Dollars)

Year	Less Than High School	High School	Some College	College	College Plus	College/  High School
1973	11.22	12.82	14.16	18.60	22.66	1.45
1979	11.15	12.49	13.61	17.43	21.42	1.40
1989	9.38	11.36	13.20	17.88	23.24	1.57
1990
1991
1992	8.86	11.07	12.52	18.04	23.03	1.63
1993	8.72	11.02	12.47	17.97	23.22	1.63
1994	8.52	11.10	12.36	18.14	24.17	1.63
1995	8.25	10.90	12.20	18.13	23.90	1.66
1996	8.21	10.84	12.18	17.86	23.80	1.65
1997	8.22	11.02	12.43	18.38	24.07	1.67
Annualized Percent Change
1973-79	-0.1	-0.4	-0.7	-1.0	-0.9
1979-89	-1.6	-0.9	-0.3	0.3	0.9
1989-97	-1.5	-0.4	-0.7	0.3	0.4

*Education levels from 1992-1997 are estimates designed to be consistent with pre-1992 educational coding.

Source: Authors' analysis of CPS ORG data; inflation-adjusted using CPI-U-X1.

[sarcasm]

There you go again, real wages are lower now than they were in 1975 for all but those who more than a college education.

[e_castillo]

China becomes more capitalist, it will become more free.

Not in my lifetime! Wasn't Richard Nixon saying the same things a "few" years ago? How many more decades? It's wishfull thinking.

[raybbr]

Certainly you understand my post where I explained it's (impediments to free trade) degrees of evil??

I am not sure where you posted this. I do see where you posted this:

LOL, yeah, I am VERY rabid about free trade. I've yet to hear from you one single justification for anyone besides the owner of a company determining who he should trade with and how much he should trade?

So, which is it? Are you "very rabid" about free trade (no degrees mentioned)? Or, are you for levels of free trade?

[1rudeboy]

Average hourly earnings in private, nonagricultural business increased in real terms by about 16 percent during the past 40 years, but professionals did better: physicians, for example, enjoyed an increase in real earnings of 33 percent in the same period.
[]
The top 5 percent of families had an increase in income of 129 percent in real terms from 1960 to 1998, while the middle fifth had an increase of 54 percent and the bottom fifth only 38 percent.
[]
The average real income of working Americans, as the chart [that sarcasm persists in misreading] shows, increased beginning in 1995--undoubtedly made possible by the spurt in productivity over the same period. [emphasis added]

Source: Scientific American

[Viva Le Dissention]

Only in the last ten years, say, has China shown any real change in its economic policies.

Yes, China abolished government owned farming in the 80s, but look at its progress since joining the WTO; frankly amazing. China wants to lure foreign investment. It can't do that with its current system of government. It will change; you cannot have a capitalist society that is not free.

[LibertyAndJusticeForAll]

According to two top Communist Chinese military brass, economic warfare can be as effective as military. And, this is what they are pursuing.

The PRC will never let go of its power, no matter what the people may or may not be enjoying in the way of capitalism. However, since their government subsidizes their businesses, and our tax money subsidizes their businesses, not to mention the devalued yuan, the high-tariffs against our imports, and other complete manipulation of the market, you can hardly call this free trade or a free market. Of course you can if you want, but that is completely inaccurate.

When in history did a government as ruthless as the PRC ever just peacefully hand over the reigns of government because they were becoming more economically and technologically powerful?

Stop drinking whatever koolaid it is that is making you blind.

Pick up a good history book, preferably one that includes Winston Churchill during the 1930s, and do yourself a favor and read it.

[KC_for_Freedom]

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.

This paragraph basically explains the author's desire to live in an economy managed by the government for the benefit of all the people. This is a basic idea that is born of the elite upper class and is suggestive of socialism and its sister communism. The hint that free trade needs to be held accountable for the larger consequences of a society implies that someone must manage things for the little people. This is such bull I can't believe you think it will work here any better than it has in Cuba.

[1rudeboy]

Perhaps you care to revise your #85, then? LOL

[Reaganwuzthebest]

I noticed many of those who don't understand this are too young to have voted for Reagan. They seem to be the brain-washed product of our liberal academia which pervades the economics department as well as other college departments.

What's going on is an attempt to completely wipe American history and what made this country so prosperous out of the minds of the younger generation. How can one even know that semi-protectionist policies in the past worked to create the largest middle class in the world if they're never taught or discussed? If anything those policies are being demonized as being a failure. Talk about Orwellian.

That Communist China still imprisons Christians for being Christian and uses forced prison labor doesn't seem to bother anyone in the Bush administration, or any of the free-traitors here.

That's the dirty little secret the free traders would prefer not to talk about. And trading with China won't make it better for those being oppressed. The thugs running that country are as committed to their totalitarian system as they've ever been and all the corporations are doing is exploiting their labor.