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.

[Ed_in_NJ]

And, of course, the things that come in from Canada and Mexico can have their originations anywhere in the world.

[Beck_isright]

Very good points. The Clintonian revisions to the way economic figures are "created" distorted everything. I'm afraid it will be up to the historians to fix the mess. And I'm fearful to see what they really might say, especially with regards to percentage of growth of government programs against the GDP.

[KevinDavis]

We just went though a Bubble economy in the last 4 years. What are your solutions? High tariffs? Force people to buy expensive items that is only made in America?

[Beck_isright]

"And, of course, the things that come in from Canada and Mexico can have their originations anywhere in the world."

Shhhhhhhh, you are not allowed to speak that secret. You might upset the entire balance of trade. </sarcasm off

[A. Pole]

You can make $500 a month, be living in government subsidized housing, get your food stamps, Medicaid, etc and be counted as employed.

I assume that huge and growing number of prisoners are not unemployed either (especially that they work for cents, undercutting the free workers, while being supported by taxpayers). BTW, prisons are counted as subsidized housing (another statistical peculiarity to remember).

[Beck_isright]

"We just went though a Bubble economy in the last 4 years. What are your solutions? High tariffs? Force people to buy expensive items that is only made in America?"

I'll take a crack at this, even though this was not addressed to me. Lower domestic taxes dramatically and increase tariffs. Let the consumer AND business decide to buy either the domestic or imported goods. But don't let government policy be the deciding factor. Right now, because of our tax structure, it's cheaper to buy imports. Take away the excessive taxation of the citizen and business, and domestic producers would expand dramatically.

[sarcasm]

The stats are from the Bureau of Labor Statistics. I'm sure that the include both the Clinton and Bush manipulations. Note that the way unemployment was calculated changed again in January 2003. Remember how the unemployment rate dropped in January?

[A. Pole]

What are your solutions? High tariffs?

Why to go from one extreme to another? Moderate tarrifs, calibrated to level playing field and to balance trade. Balanced and fair trade is good as opposed to the predatory, short-sighted economical "policy".

[Ed_in_NJ]

None of the figures ('cause nobody's counting) reflect the fulltime hi-tech worker who was earning $100K that is now a fulltime hi-tech worker who is earning $50K.

[Prodigal Son]

How many hours of labor should be required of the workers that produce the shoes in order for them to be able to afford those shoes?

Good question. I would guess a few hours less than it would take a Boeing employee to afford a commercial airliner, but a few hours more than it takes the woman on the pipe cleaner assembly line to afford a fuzzy, twistable piece of wire.

[KevinDavis]

It won't happen, the reason, it actually works.

[A. Pole]

I would guess a few hours less than it would take a Boeing employee to afford a commercial airliner

A commercial airliner is not a consumer item. The plane ticket is.

[Beck_isright]

Anything logical is against the law. The design of our current political parties prevents logic from being part of anything.

[KevinDavis]

There is no such thing as a level playing field.

[texas_fool]

"just that if we had one"

Why bother saying anything... If I had a billion dollars I would be thinking everything is peachy!

Bye now. have to get back to reality... looking for a better paying job with a good prospect for the future.

[FITZ]

High tariffs?

Without American businesses paying taxes to our government, plus American labor paying taxes to our government, we still have the ever-increasing government hand-out programs and other high cost of government. How do we pay for it? How do we pay for the care of all the unemployed and underemployed. Medicaid has skyrocketing costs.

[Prodigal Son]

A commercial airliner is not a consumer item. The plane ticket is.

Make it a Ferrari then.

[Prodigal Son]

BTW, prisons are counted as subsidized housing (another statistical peculiarity to remember).

That's because prisons are subsidized housing ;-)

[FITZ]

Who makes up the difference in taxes that hi-tech employee was paying? At $50,000 that employee is getting dangerously close to the level where he can obtain government programs like CHIP and food stamps. He's not going to be paying nearly as much taxes ---but if his wage drops much more he qualifies for the handouts.

[A. Pole]

At $50,000 that employee is getting dangerously close to the level where he can obtain government programs like CHIP and food stamps.

$50,000 is a good pay. What about $20,000 ?