Posted on 04/02/2004 1:31:23 AM PST by nika
March 15, 2004 issue
Copyright © 2004 The American Conservative
Trading Away America
by Pat Buchanan
If a third-party populist were to run in 2004 on Ross Perot’s signature issues of unfair trade and mammoth deficits, George W. Bush would suffer the fate of his father. He would be a one-term president, fortunate to get 40 percent of the vote. For the combined budget and trade deficits George W. has run up dwarf anything his father produced.
Even before the cost of war is factored in, the fiscal deficit for 2004 is $521 billion. But the trade deficit, five times as large as any his father ran, is a graver matter. The second American Century may be aborted.
In 2003, our merchandise trade deficit came in at $550 billion, 5 percent of our gross domestic product. With China, our trade deficit hit $124 billion. U.S. imports now account for 100 percent of China’s growth.
To the Alfred E. Newman Economic Club that meets at the Wall Street Journal editorial offices, such trade deficits don’t matter. But President Bush and Karl Rove had best pay heed.
| For factory closures, lost jobs, and the outsourcing of back-office work to India and Asia are the hottest issues in the Democratic primaries and a huge liability for a president who has presided over the disappearance of one in every six manufacturing jobs in the USA. |
The trade deficit is also behind the dollar’s loss of 15 percent of its value against major world currencies last year. Only huge purchases of Treasury bonds by the Bank of Japan and the willingness of Beijing to pile up a hoard of dollar reserves prevents a run.
Why are China and Japan subsidizing our consumption? For the same reason a drug dealer hands out samples of crack cocaine to school kids. To get them hooked.
By keeping the value of their currencies low, Japan and China not only keep their factories humming, as ours shut down, they are effecting the steady transfer of the factors of production from America to Asia. They are making this once self-sufficient Republic a future dependency of Asia, as we ship them our industrial base, our technology, factories, plants, and skilled jobs.
| In classical liberal economics, free trade is win-win. But that is not true of power politics, where, as one nation rises, another recedes. As China knows and we have forgotten, trade is foremost among the means nations use to advance in industrial and military power at the expense of rivals. Great powers that run chronic trade deficits, with declining currencies, are invariably fading powers. |
As it rushed to the rescue of Gregory Mankiw, the Bush adviser who celebrated outsourcing as good for America, the WSJ tutored us:
If country X does or makes something with relatively low cost compared to country Y, then country X should make it. Country Y is thus released to earn higher returns on something else.
Fine as theory. But if country X is the Germany of Kaiser Bill and Admiral von Tirpitz and country Y is the Britain of Lord Salisbury, one indulges such drivel at the risk of national survival.
| China is becoming the factory floor of the world. And as her leaders force her people to sacrifice for the future, America, where the consumer is king, indulges herself in the present. In the free-trade catechism, what’s good for me now is good for America. Yet not only does this contradict common sense, history reveals it to be the folly of every declining great power from Holland to Spain to Britain. |
From the Britain of the Acts of Navigation to the America of Lincoln and Theodore Roosevelt, to Bismarck’s Germany and China today, big nations that treat trade as a matter of paramount importance are the rising powers that come to dominate the world.
The Chinese are the ants of summer, gathering for the winter. Americans are grasshoppers consuming themselves into dissipation.
Last October, Warren Buffett revealed that he was speculating in foreign currencies, betting against the dollar: “[O]ur country,” he wrote, “has been behaving like an extraordinarily rich family that possesses an immense farm. In order to consume 4% more than we produce—that’s the trade deficit—we have, day to day, been both selling pieces of the farm and increasing the mortgage on what we still own.”
Bush is indeed the fortunate son. Not only has he no Perot in the race, he is running against a senator who voted for NAFTA, the WTO, and permanent MFN for China, and is equally oblivious to the truths Warren Buffett has recognized.
We’ve said it before. America needs a new party, an America First Party that will stand against amnesty for illegal aliens, walk out of the WTO, and abandon these imperial wars that are bleeding and bankrupting our country financially and morally.
| Squanderville versus Thriftville (Warren Buffet) ^ |
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| Posted by dennisw On News/Activism ^ 01/07/2004 11:35:03 PM EST with 15 comments fortune ^ | oct 2003 | Warren Buffet By Warren E. Buffett, FORTUNE I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits -- and, as you know, we've not only survived but also thrived.... |
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The economics textbook was written before there was an Internet, before factors of production could be shipped offshore. "Comparative advantage" was based upon a largely commodity exporting world, i.e., it was senseless for Britain to try to have a protected, subsidized wine industry. Let Portugal make the wine while Britain makes the textiles. What Ricardo didn't anticipate was a world where, in effect, the entire British textile industry could move to Portugal. And the shipbuilding, finance, steel making industries as well.
Buchanan was the lone voice crying out in the wilderness for a long time. Now everyone sees that he was telling the truth all along. Now, white collar workers see happenning to them what happenned to blue collar workers twenty five years ago.
Seriously...Buchanan hits a lot closer to home than Bush does on immigration, but he needs to pick up an economics textbook sometime. He comes off sounding like a Moveon.org intern that Al Gore is paying to throw rocks at a WTO protest.Here are some excerpts from an IEEE-USA position paper on offshore outsourcing that can be read in its entirety here. They don't need an economics textbook to understand what is happening:
--FreedomFlynnie
Forrester Research has projected that as many as 3.3 million white-collar jobs of all kinds and over $136 billion in wages will be moved from the United States to lower cost, offshore locations by 2015. Although the initial emphasis has been on routine service and technical support positions, the trend is expanding to include more complex engineering and design services. It is abundantly clear that many of the jobs being sent offshore were formerly held by U.S. engineers, computer scientists and other information technology professionals.The offshoring trend is particularly unsettling for American high-tech workers. The economy lost 3 million manufacturing jobs in the past decade. American high-tech firms shed 560,000 jobs between 2001 and 2003, and expect to lose another 234,000 in 2004. The Commerce Department reports that the number of U.S. IT workers employed in all industries has declined by 8 percent since 2000. Although initially concentrated in the manufacturing sector and in low-skilled jobs, the Commerce Department says that "recent job losses have been widespread across most IT-goods and services producing industries, and across all IT skill levels." Some jobs are expected to return with a stronger economy, but the majority are probably gone for good. Offshore outsourcing will further compound that shrinkage.
...
IEEE-USA is particularly concerned that offshoring of engineering, computer science and other high tech jobs could eventually weaken America's leadership in technology and innovation, a threat that has serious implications for our national security as well as our economic competitiveness.
Fewer job opportunities and the downward pressures on wages that will occur as more and more scientific and engineering jobs are shifted to lower-cost, overseas locations are also likely to discourage many of America's best and brightest young people from pursuing careers in science and engineering.
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