Stop trading U.S. jobs away

New York Daily News ^ | May 25, 2003 | Lou Dobbs

[sarcasm]

We're in a modest economic recovery, one that is still fragile. And this recovery is not creating jobs. I'm far more concerned about the jobless nature of this recovery than the level of interest rates or market levels.

Government and corporate policies are sending more jobs, capital and American know-how overseas to produce goods and services more cheaply. The proof is in the numbers: The U.S. account deficit, the broadest measure of transactions with other nations, swelled to $503 billion in 2002.

That's not the way it was supposed to work. Increased global trade was supposed to lead to better jobs and higher standards of living by opening markets around the world for U.S. goods. Now some people, myself included, are rethinking the belief that free trade benefits all nations.

According to the Economic Policy Institute, rising trade deficits cost 3 million jobs in the U.S. between 1994 and 2000. And a report by Forrester Research predicts that nearly 500,000 tech jobs will be moved overseas by 2015.

We're also exporting capital. Companies like Motorola have invested billions in China - the country with the largest U.S. trade imbalance with the U.S.

Another problem resulting from America's trade imbalance: Intellectual capital is being shipped overseas - in some cases, raising national security concerns.

So what's gone wrong? Alan Tonelson, author of "Race to the Bottom," says unequivocally that corporate America is largely to blame. "They sold America a bill of goods during the 1990s, because they said that all of these new trade agreements ... were going to boost exports from their American factories. And what they've done is they've used these trade agreements to send production abroad."

Controlling costs

Of course, American business needs to look for ways to control their costs. And consumers are often driven in their purchases by prices.

But it's not just corporate America that needs to adjust to the new global marketplace. Federal and local policymakers need to recalibrate as well.

David Huether, chief economist at the National Association of Manufacturers, says policymakers need to ensure that the regulatory environment is conducive to maintaining our competitive edge.

"To make domestic manufacturers more competitive," he says, "we have to make sure that there aren't future increases in regulation that would push up costs here."

He adds that the federal government should promote trade adjustment assistance to help displaced workers find new employment.

We also need legislation that encourages companies to keep jobs here.

"The only way we can get in on this game is to ... make penalties for those who manufacture overseas and benefits for those who manufacture in the United States," Sen. Fritz Hollings (D-S.C.) told me. "I have a bill to keep the jobs in this country. It's going to be an uphill fight because we've got to really change the culture."

Changing the culture won't be easy: The middle class has little representation in Washington, the multinationals have little incentive to produce here at home, and working men and women in this country are watching their paychecks shrink in response to the competition of lower-paid foreign workers.

Trade barriers

Huether says that policymakers also need to lower barriers to trade overseas.

"Our tariff rates on industrial goods average less than 2%," he says. "The rest of the world, particularly developing Asia, is a lot higher - in the area of around 10%."

On the corporate side, Huether says businesses need to invest in their employees.

"The way that manufacturers compete is through their very high productivity, and one of the ways to do that is ... by maintaining a very able and trained work force," says Huether.

There's no easy corporate or government policy solution to America's export problem. It's time for corporate leaders and policymakers to heighten their efforts to keep American jobs from going overseas.

[afz400]

Economics aside, it doesn't make much sense to have a country like China to be in the position of making so much of our goods like shoes, clothes, furniture, and computers.
We will be at war with them in 20 years and then how are we going to be able to make the things we need to survive? We are in danger of losing the knowledge and industrial capacity that we need to make our own goods.

[Beck_isright]

"You sir hit the nail on the head! Don't forget the lawsuits by overzealous lawyers and also more demands by the unions that company provides employees health care and baby care. It is getting to expensive to do business in this nation."

And how are all these lawsuits possible? Why is health care so expensive and baby care being mandated? Because we have opened the Pandora's box since 1932 of Big Brother running everything. Get the government out of business and let business get the economy rolling.

[alrea]

tax cuts will cause gradual adoption of smaller guv, more private solutions and legal reform which will drive the economy and reinvent life as we know it

[KevinDavis]

and business will start coming back here. Also schools are teaching how to be sensitive and how evil America is rather than the basics is also the reason why companys is going to India and elsewhere to hire people.

[m&maz]

True.. but only if those tax cuts are accompanied by a decrease in government spending.. So long as our legislators continue to spend $2.50 for every $1 we send to Washington, the situation will not improve..

[harpseal]

In a story about India in The Business Standard the following quote appeared “KPMG has also suggested tax holidays for undertakings located in free trade zones, software technology parks, electronic hardware technology parks among others.” Perhaps the same suggestion could be used in the USA to re-develop some industries here.

Perhaps some inner cities could have free-trade, tax free zones where all profits from business located there would not be subject to Federal taxation. What a concept the most strategic and essential industries for the USA would be free from taxes to help power the rest of our economy. Of course I can see it now we would have some of our noble politicians decrying this from the outset as a giveaway, any requirements that those legally in the USA as permanent residents be employed therewith no H1B visas or L1 visas allowed as being grossly unfair.

Oh yes, these areas will need basic police and fire services and some payment for these services and only these services could be arranged. What better place to invest in new facilities for aerospace or any other venture. Employment would soar in that area and surrounding areas. If one located such an area in an inner city said city would become a boom town with most of the residents who wanted jobs having them.

I know the enviro-wackos would complain about the fact that there was economic growth and all these suddenly affluent people were using too many resources. The cities would complain because they were not getting their graft from the tax revenues in these zones although the total tax pie would be larger. There would have to be regulations offshore purchases of goods and or services would have to be justified by showing there was no domestic source and that showing would be subject to fraud prosecution if found to be intentionally false. In short we have zones set up where companies can avoid the stifling tax structure of the current American Economy on a voluntary basis with stipulation that they employ Americans including lawful immigrants and the stipulation that they contribute as much as possible to the American economy.

I know such a plan will never ever be adopted as there are way too many political interests that are totally opposed to such a plan. Similar plans have been proposed in the past by several Republicans and always they have been shot down in the political process. However, such zones could become the engine that causes growth to pick up over the next decade or two so that we can eventually fund the retirements of the Baby Boom generation. As such zones become ever more prosperous we may eventually expand them to include ever larger parts of our nation. Such zones could eventually encompass most of our nation as the taxes generated from people working in such zones could fund all our commitments. Of course there is a huge danger in such a plan as the politicians would quickly lose their control over the population by the manipulation of welfare benefits and the tax code to pick winners and losers in these zones.

[harpseal]

What we first need to do as a nation is to stop subsidizing the export of capital and jobs. We do not have free trade at present we have a situation where the USA is a source of capital for foreign nations and is acting as the transferer of wealth while those nations have in place policies that prevent the return flow of wealth to the USA.

For one small set of measures along the way I wrote the following essay <a href="http://www.freerepublic.com/focus/f-news/912627/posts'> Saving Our Economy</A>.

[Lightnin]

"Actually, 6% unemployment is very high for the United States. There have prolonged periods (1951-72) when the average was under 4%."

That is absolutely incorrect.

Check the World Almanac under "unemployment" and you will see that there has rarely ever been a period in which unemployment averaged under 4%.

You must have gotten your data from the New York Times!

[the gillman@blacklagoon.com]

When your long term unemployed neighbors panic sell their houses at rock bottom prices you will lose value along with them. Since most people's main asset is their home, everyone is about to take a beating.

[arete]

The Japanese economy has been in the tank not because of global free trade

True -- Japan collapsed because the monetarists created a bubble economy with too much cheap money and easy credit. All bubbles burst and take the economy with them. We are going through the very same thing here.

Richard W.

[harpseal]

Corrected link Saving Our Economy.

[sarcasm]

See the link in #17.

[NoControllingLegalAuthority]

The outsourinc of america WILL be an important election issue someday in the not to distant future.

Hillary Clinton could become president on the issue.

When YOU are unemployed, it's the economy and it's personal at election time.

Markets and remorseless greed are definitely efficient. They can destroy the standard of living of a great nation in a heartbeat. You are watching it. It's not free trade. It's unfair trade. A dictatorship (China) uses slave and prison labor with no employee safety or exploitation protections to compete against America, where people have choices and labor safety regulations.

The Chinese aren't better workers than Americans. They simply work for almost nothing. They have to. The Chinese standard of living is not rising to ours. Ours is falling to theirs.

We are in a race to the bottom. China keeps making stuff cheaper and Americans will have less money with which to buy it because all of our jobs were sent to China. At some point Wal-Mart will sell everything for a nickel and nobody in America will have a nickel.

Free market cheerleaders are boasting "progress" in global economics while millions of unemployed Americans will soon be ready to take to the streets and tear down the system that caused this to happen to the greatest country on earth.

There will be no need to send a child to college. There will be no job for the graduate.

Ross Perot correctly predicted this. All of this has a sound - a giant, sucking sound. It's gonna get ugly.

[FITZ]

Sure. I am. I pay less for socks and shoes

You're paying more in taxes and in other ways to provide care for the unemployed and the NAFTA displaced workers, you are paying to provide food stamps for the families now living on minimum wage. If NAFTA and free trade were going to fix everything, then why are California and Texas facing very large state budget deficits?

[sarcasm]

Annual average unemployment rate, civilian labor force 16 years and over

Year	Ann Avg
1948	3.8
1949	5.9
1950	5.3
1951	3.3
1952	3.0
1953	2.9
1954	5.5
1955	4.4
1956	4.1
1957	4.3
1958	6.8
1959	5.5
1960	5.5
1961	6.7
1962	5.5
1963	5.7
1964	5.2
1965	4.5
1966	3.8
1967	3.8
1968	3.6
1969	3.5
1970	4.9
1971	5.9
1972	5.6
1973	4.9
1974	5.6
1975	8.5
1976	7.7
1977	7.1
1978	6.1
1979	5.8
1980	7.1
1981	7.6
1982	9.7
1983	9.6
1984	7.5
1985	7.2
1986	7.0
1987	6.2
1988	5.5
1989	5.3
1990	5.6
1991	6.8
1992	7.5
1993	6.9
1994	6.1
1995	5.6
1996	5.4
1997	4.9
1998	4.5
1999	4.2
2000	4.0
2001	4.7
2002	5.8

 

[Ed_in_NJ]

Glad you're doing well -- do you think you're immune from being undercut by cheap foreign labor?

FYI, I am one of those that vote with their pocketbook, and take significant measures to "buy American" - part of that 'let the market decide' idea, and not closeted socialism.

[Beck_isright]

You can't teach the "basics" to a nation of socialist sheep. Canada is where we will be in 10 years or less. Goodbye America, welcome to the Union of North American States, the future of where I fear we are headed. Where everyone is treated "equally" and made so by economic and tax policy.

[Beck_isright]

Ah, I just love "free trade" Eurocommunist style.....

Who Renamed My Cheese? The EU. (WTO Alert!)

[FITZ]

Does that chart take into account some of the manipulations in reporting unemployment? The Clinton administration changed the way those figures were to be reported so that if someone works just a part-time job with a few hours, they are considered unemployed. You can make $500 a month, be living in government subsidized housing, get your food stamps, Medicaid, etc and be counted as employed. Plus those numbers never count the permanent welfare class and I doubt they count the NAFTA displaced workers because the government has them in "job retraining" programs.