The New Protectionists

opinionjournal ^ | March 10, 2006 | WSJ

[groanup]

REVIEW & OUTLOOK

The New Protectionists - How to create a real security crisis.

Friday, March 10, 2006 12:01 a.m. EST

Dubai Ports World finally threw in the kaffiyah on its American operations yesterday, agreeing to sell them "to a U.S. entity." We hope that entity turns out to be Halliburton, if only for the torment that would cause certain eminences on Capitol Hill.

Dubai Ports was susceptible to this political stampede because it was an Arab-owned company buying port operations, which Democrats have played up as uniquely vulnerable. But this is also the second such mugging of a foreign investor in recent months, following last year's demagoguery against a Chinese company's bid to buy Unocal, a middling American oil company. If Members of Congress want a real security crisis--a financial security crisis--they'll keep this up.

What's especially dangerous here is that we're seeing the re-emergence of the "national security" protectionists. They were last seen in the late 1980s, when Japan in particular was the target of a political foreign-investment panic. The Japanese were buying Pebble Beach and Rockefeller Center, and so America was soon going to be a colony of Tokyo. A Japanese bid for Fairchild Semiconductor of Silicon Valley was seen as a threat to American defense. Those fears seem laughable now. But here we go again, with new targets of anxiety.

snip

[expat_panama]

Tonelson is just trying to be even handed as he can be.

Even handed my tush.   If the federal bean counters are to be trusted then Tonelson has to admit that more people are getting richer from more higher paying jobs.   If he doesn't then he can't say there's a trade deficit.   Tonelson was not honest because he arbitrarily agreed with one and not the other.  

He was also dishonest in making up straw man definitions (nobody wants what he calls "free trade" or can list what he calls the "current account")  and by fabricating Bernanke quotes ( “we will be building up a foreign debt to other countries which, all else equal, lowers national wealth” --not from Bernanke's Feb. 15 congressional testimony nor from the enclosed report).

[Toddsterpatriot]

Who says they aren't doing precisely that and still "selling" the substitutionary components at a drastically lower price to the home country? The wage differential is sufficiently large for all of those games to be played...and then some.

So they're playing a game by lowering the cost of Chinese parts and raising the cost of Chinese parts?

That makes less sense than your usual post. Try again? Please spell out the game you think they're playing, why they would play it and how it proves your assertion from post #443. And if you had some source that backs up this assertion "70% or so of the import costs in many cases is TRANSPORTATION" that'd be nice too. I'd hate to think I'm wasting my time dealing with stuff you made up out of thin air.

[TheForceOfOne]

   

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[TheForceOfOne]

Sorry, didn't mean to post on #463, please disregard.

[Paul Ross]

So they're playing a game by lowering the cost of Chinese parts and raising the cost of Chinese parts?

Nope. Read again. I said they can play all kinds of games, because are so many ways to play it. But clearly, the main advantage is the low wages. Period. Not the tax treatment. They're playing "a game of lowering" the U.S. production costs.

[jonrick46]

Here is an article by Stephen Spruiell entitled "Protectionism: Tariffs, Subsidies, and Trade Policy":

http://www.aworldconnected.org/article.php/489.html

[Toddsterpatriot]

Nope. Read again. I said they can play all kinds of games, because are so many ways to play it. But clearly, the main advantage is the low wages. Period.

Yes, Chinese wages are lower (duh!).

They're playing "a game of lowering" the U.S. production costs.

Why would they play a game which raises their tax liability?

So, you have no source for any of your assertions? Making stuff up again?

[jonrick46]

This is not a stupid post! It may seem stupid because I gave the Reader's Digest condensed version. I was not in the mood to fill my post with a complete dissertation. It was actually meant to be a rant--to ring some bells!

I am, unlike many conservatives, for capitalism that enjoys as much free trade as possible. If the United States were to take the lead and show that it is to everyone's benefit to practice free trade, there would be more prosperity for all. Call me a misguided globalist. Mine is an optimistic vision: I see a world where the best from every human community is shared and prosperity thrives. I see this as an unique time where information has no boundaries and the innovative spirit can reach new heights. This is also an opportunity for Democracy to reach new peoples. It is a fact that a people that trades with you will share not only their wealth but also their values. Instead of the United States being the great melting pot, the world will be one huge melting pot. The possibilities are unlimited!

For insights into the arguments for free trade capitalism, I give you this article by Stephen Spruiell. I especially like his explanation of the concept of comparative advantage:

http://www.aworldconnected.org/article.php/489.html

[rcocean]

I've invested my money since 2000 based on the idea that the long-term value of the dollar is going down and commodity prices are going up. I've done quite well, and I think the trend over the next 5 years will be more of the same.

If you want to believe in the free trade tooth fairy, go ahead.

[1rudeboy]

What kind of crap is that? The government should forbid you from investing your money that way. /sarc

[LowCountryJoe]

Did you actually read through all of that? That guy is too much with his longwinded BS. The last several times he was tripped up by the very data he posted, he continued on and found even more stuff for us to read...he's a friggen sppeedbump: a human rain-delay.

[Toddsterpatriot]

Just another one of his data dumps. I guess he thinks quantity is more important than quality. Must not know how to highlight or cut and paste.

[rcocean]

Well, your view is more nuanced than I first thought.

Good luck.

[unseen]

Are you really that brain dead? They make the parts in other countries. they ship those parts to the US where the parts are put together to form a something. The production records the entire price parts+assembly to the US thus inflating the numbers in the US favor. When in reality we are losing production CAPACITY.

[unseen]

Sounds great. In theory, but Hitler, Attila, Mussolini, Alexander, Bin Laden etc all had the same vision. Only they were the ones callling the shots. So if this great world order comes to pass who will be calling the shots? The elite leaders or the people? Will we have a democratic, republic, or imperial form of government?. You do understand that the concept that some form of government is a necessary evil is still as relevant today as it was when Thomas Paine wrote it in the 1700's right? And since we will need a government to control the laws and regulations for the world like the WTO who is going to run it?.. There is no guarantee that in will be the US in fact if it was truly a democratic world than China and India would hold more power to influence our lives once we give up our borders and Constitutional rights to form this perfect democracy. Have you ever heard of the Pied Piper. Free traders are dancing to his tune IMO.

[unseen]

Here's some cut and paste. Like facts on GDP:


Of the three methods for calculating GDP, the expenditure approach is most common. This approach sums the total expenditures by each sector of the economy: household Consumption, business firm Investment, Government purchases, and Next Exports which is eXports - iMports. The formula is GDP=C+I+G+(X-M). Determine GDP for 1997 (data is in billions of dollars).:


GDP C I G X M
5,493.7 860.7 1,454.6 965.4 1058.8

Adding across we can determine that GDP is $7,715.6 billion or slightly less than $8 trillion. That's a lot of stuff. How much is $1 trillion? If you had a trillion dollars bills in one stack, it would be slightly higher than seven New York State Empire buildings; laid end to end they would reach the moon four times. The U.S. doesn't have a trillion dollars bills. Remember that GDP adds each sale which is price times quantity.


http://www.brazosport.cc.tx.us/~econ/arch/GDPcalc.html


Comment:

If you bother to read further and due the math you will see that for the last 40 years The percentage of GDP due to Industry and trade has fallen and the GDP due to Consumer and Government has risen. Thus we own an ever increasing amount of our GDP to government and consumer spending. In other words our industrial expenditure as a percentage of GDP is about 5% less than in 1965. If our industrial base was really growing the 1997 number should be higher than the 1965 number but of course it is shrinking. And if you look at 2004 numbers it is even worse and the decline is accelerating. But you free traders keep smoking that wacky weed and drinking the kool aid. Short term profit is not the same as long term gain.

[jonrick46]

"So if this great world order comes to pass who will be calling the shots?

I think the scenario of a world ruler emerging out of a world in caos to set up a world order has been in the minds of many through the ages. The hope of Christ coming back to set up his Kingdom on earth is one. There have been the Hitlers and the Saddam Husseins throughout history. However, this archetypal pattern of thinking should be separate from what global free trade is about. In fact, global free trade opposes a world ruler which imposes restrictions on the free exercise of ones franchise. Market forces will determine who is playing fair and punish those who fail to play fair. It is not necessary for a pol pot ruler to mandate compliance with the world order.

[LowCountryJoe]

Are you really that brain dead? They make the parts in other countries. they ship those parts to the US where the parts are put together to form a something. The production records the entire price parts+assembly to the US thus inflating the numbers in the US favor. When in reality we are losing production CAPACITY.

Hey, Genius! Go back and reread post #431. Notice the bolded portion?

Now, let's cut to the chase and strip away what those damned foreigners contributed to our manufacturing output - an output that continues to rise, by the way, as you've just rightfully admitted to by not countering worth a shit. Let's just look at our domestic value added in the manufacturing industries, shall we?

Where should we go first: here [line 25 (which is lines 26 through 29 added together], here [line # 12 (13-33)], or here [line # 12 (13-33)]

Okay, where will you go from here? Would you like to shift the argument to something else, refute the data, bury your head in the sand and not respond? Where do you possibly go from here, other than doing what protectionists do best when smacked down with the data - which is: resorting to anecdotal bullshit?

[expat_panama]

the scenario of a world ruler emerging out of a world in caos to set up a world order has been in the minds of many through the ages. The hope of Christ coming back to set up his Kingdom on earth is one.

You're a dangerous man.   That makes two of us ;-).

Something else I got to thank you for (with that link of yours) is giving me a handle on what I'm seeing as the main polarization that's coming up --the forces of gloom and tyranny vs. the us good guys.   It's not Republicans against Democrats, rich vs poor, the east against the west.  Seems like what we're really seeing here is the helpless attacking their benefactors.

No problem.   We can handle them.

[1rudeboy]

I've always been amused by the "Gross Domestic Product includes Value of Imported Product" argument. You really have to wonder where it originated.

My guess its creator is some economic demagogue who obscured how the GDP number is calculated in order to whip-up an emotional reaction. One would think that an established protectionist should come out and say, "Enough already. That sort of BS is hurting the cause. Can we please stick to reality?"