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Conservative sees free trade as threat to manufacturing
Chicago Sun-Times ^ | July 12, 2003 | Thomas Roeser

Posted on 08/01/2003 3:10:33 PM PDT by RockyMtnMan

John E. Jones is my kind of conservative. The white-haired, vigorous banker is a fierce defender of capitalism and believes that only through hard work and a vigorous spiritual life (he's a devout evangelical) can one truly be fulfilled. At the same time, he is a devastating critic of some multinational corporations which, he says, have given us ''free trade,'' and a crusader for legislation to protect American manufacturing. In fact, free trade to him means America with its guard down; it's a threat to our economy and to the security of the nation.

And Jones has the facts to prove it. More than 56,000 U.S. manufacturing jobs were lost in June, the 35th straight month of losses due largely to foreign competition--particularly from China, where goods can be made at a fraction of the cost and sold cheaply on our market. Forty-nine states have shared in the loss of more than 2 million manufacturing jobs since July 2000. Illinois' record is devastating. In 1974, it had 1,345,000 manufacturing jobs, or 30 percent of all state jobs. By 2001, it was down to 907,000, only 15 percent of state jobs. By 2002, we were down to 870,000, and we're still dropping. This state has lost one of every 12 manufacturing jobs since July 2000, he says.

''Don't forget that the rule of thumb for each new manufacturing job is that it creates 1.6 jobs in other manufacturing and service industries. Also the loss of one manufacturing job will cause the loss of 0.8 jobs in service industries.''

Jones knows whereof he speaks; he is a manufacturer as well as a banker. His Cummins Allison Corp. is, because of its patented technology, the only U.S.-owned company that manufactures coin and currency processing equipment. His competitors have withered away to foreign ownership. Cummins Allison is now engaged in litigation to save its many patents. This could be a national security issue, Jones says. Cummins' equipment ''helps protect against the possible flooding of the world with fraudulent currency and the tracking of drug and terrorist money.''

As Jones sees it, when the U.S. economy was protected by high tariffs, effective anti-trust, anti-dumping, minimum wage and patent laws, it flourished on a relatively level playing field with world competitors.

But after World War II, ''the 'free trade, free market' doctrine was embraced . . . and by 1971, the United States became an open, unprotected economy.''

If free trade worked as touted, Jones says, ''incomes for the poor, the middle class and rich should be significantly greater . . . the growth rates of gross domestic product, per capita income and real wages per worker would all have substantially increased. This has not happened.

"Instead, growth rates for GDP and per capita income have declined and real wages per worker have turned negative. Our nation is now a net debtor rather than a net creditor as it was when protected. Over 45 percent of U.S. government treasury notes, 35 percent of U.S. corporate bonds and 13 percent of the U.S. equity market are foreign-owned, and 9 percent of U.S. corporations are subsidiaries of foreign companies. Our balance of payments deficits for 2002 was over $500 billion. We now have 6.5 million citizens looking for jobs, 2.7 million who have lost hope and stopped looking, and 4.8 million only working part-time. The real unemployment rate is probably over 10 percent--not the 6 percent reported by the government.''

Jones levels blame on segments of big business for making ''free trade sacred doctrine.'' Some ''large U.S. multinational corporations see it as a way to break the power of the unions and reduce the wages of their workers. They believe that manufacturing in poverty wage level countries will enable them to compete with high-tech and large-scale manufactured products dumped here from high-wage countries like Germany and Japan that protect their domestic markets. But this is not working. U.S. multinationals are still losing the trade war, even with access to labor that is paid at poverty-level wages.''

The answer is a return to a protected economy, Jones says. He was just getting warmed up. More of his blunt analyses next week.


TOPICS: Business/Economy; Culture/Society; Extended News; Foreign Affairs; Government
KEYWORDS: freetrade; manufacturing; offshoring
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To: daviddennis
Apples and Oranges. GM and others had direct competition with other companies, not other Countries! They didnt fight against comunist governments that prop up their industries, like we have to face now with China.
41 posted on 08/01/2003 6:00:28 PM PDT by RaceBannon
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To: RockyMtnMan
"It's the governments responsiblity to maintain a "level playing field" to foster competition"...

That is not in the link you posted.

Government is a necressary evil, to secure our borders, and not much else. Certainly not to level a playing field.

42 posted on 08/01/2003 6:53:20 PM PDT by MonroeDNA (No longshoremen (who make an average of $120k per year) were used to produce this tagline.)
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To: RockyMtnMan
"How does one become competitive with third world wages?

Compete.

43 posted on 08/01/2003 6:55:26 PM PDT by MonroeDNA (No longshoremen (who make an average of $120k per year) were used to produce this tagline.)
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To: MonroeDNA
"artificial heart-pumps"

And when some coolie making 10 cents an hour, starts making these, Jose will sell you his mud hut...

44 posted on 08/01/2003 7:14:27 PM PDT by alphadog (die commie scum)
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To: MonroeDNA
The government has created an environment that prohibits me from competing on a wage for wage basis. Therefore the government must fix that environment until I can compete dollar for rupee.

Do you not grasp the concept that our government's role is to ensure a market that is fair for all to compete? The constitution spells it out in black and white yet you continue on with this ridiculous notion that no industry is worth protecting?
45 posted on 08/01/2003 7:22:29 PM PDT by RockyMtnMan
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To: MonroeDNA
Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;

Not the general welfare of India.

To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;

Regulation implies negotiating favorable trading conditions with a foreign power. Many of our founders also talk about protecting industry from nations that would capitalize on our economic weeknesses. Free Trade is a new concept tariffs and excises are not.

46 posted on 08/01/2003 7:30:42 PM PDT by RockyMtnMan
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To: RockyMtnMan
Farming out American ingenuity is a surefire way to create future competitors than can out-compete us.

You just reminded me of how, in the crinton years, the Chinese gained access to our patent office and it's files.

I'm going to have to re-search for the information but I'm pretty sure they and the Russians were given the keys to the place.

47 posted on 08/01/2003 7:44:06 PM PDT by ohmage
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To: RockyMtnMan
"The government has created an environment that prohibits me from competing on a wage for wage basis...."

No, you chose a field where you cannot compete with the world. I feel sorry for you, but it was your chice.

"Therefore the government must fix that environment until I can compete dollar for rupee."

So taxpayers must pay more for goods because of your poor choices?

Are you proud of your demands? You should be ashamed.

48 posted on 08/02/2003 4:23:01 PM PDT by MonroeDNA (No longshoremen were injured to produce this tagline.)
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To: alphadog
"And when some coolie making 10 cents an hour, starts making these, Jose will sell you his mud hut..."

Lol! Let them try. Unlike the whiney union folks on this thread, who demand job protection because they are not smart enough to compete, We applaud competition.

Why? We are Americans, and innovate, and create new things. We are paid for our brains, and our innovation. We compete on a worldwide scale, and fear no one.

If some company comes along that is smarter than us, and eats our lunch, God Bless them. We will think of something else. We are not afraid to compete, world wide, on our own talents. Because we are Americans. And we don't whine.

49 posted on 08/02/2003 4:36:11 PM PDT by MonroeDNA (No longshoremen were injured to produce this tagline.)
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To: MonroeDNA
Ok, what about accountants, finance analysts, para-legals, etc.

It doesn't just affect IT, the implications are far more reaching than you realize.

What field is a good field to compete with slave wages in?

I'm actually quite secure with my skills, as a matter a fact the 90's boom can be attributed to my skills, so your welcome.
50 posted on 08/02/2003 4:43:11 PM PDT by RockyMtnMan
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To: JohnnyZ
Hello All:
There is a quote in the Sunday Denver Post by the president of an outsourcing company called Technology Crafters:

“There’s a lot of interest,” said Robert Welch, the company’s president. “American software teams are awesome for innovation, but in terms of being able to crank things out in a productive manner, they’re no the best on the planet.”


I find this quotation completely laughable! What a joke! If the Indian software companies were held to the same high standards that the software companies in the United States are held to, their prices for labor and product would be the same. A good example would be that a customer product takes 10,000 lines of “C” code in order to provide the customer with the amount of functionality they need. The Indian programmer writes the code and the documentation in order to install and use this piece of software. The Indian’s American counterpart writes the 10,000 lines of code, the documentation to support the installation and use of the software and he/she will also write the ISO9001 documentation required to go along with the software product which includes the project planning document, the software design document, the software testing documentation, the architecture review board documentation, etc. As you can see it’s obvious who takes more time to produce their product and who does a more careful and a better job. So just how many Indian software companies are ISO9001 certified? I wonder! American IT management would like their customers to think the quality is the same but underneath it all, we all really know the truth.
Let me relay an actual customer event that took place recently, a large Swiss Bank found an operating system defect on their system while trying to write an application to produce custom graphics for their bank statement printing. The function they found the bug in was wcstombs which converts wide character set strings to multibyte character set strings. Anyway this customer was/is paying for 24 X 7 development support and called into the 1-800 number and talked with a support engineer here in the United States. The customer was told that the engineers where looking at it and that they would be updated every morning until the fix was shipped. The software these days is written in India, it was Friday morning here in the United States, the Indian programmers don’t work weekends or overtime and are not required to be called out even if there is a customer emergency. The support representative from the United States called the customer on Saturday morning, Sunday Morning, Monday morning, always telling the customer that the engineers were working on the fix even though they weren’t. The customer finally received their fix the following Thursday afternoon, thus making the delivery of their bank statements late and costing them a lot of extra money for shipping, etc. Previous to this instance that same software had been written here in the United States, the customer would call in on Friday morning and a real software engineers was working on it within the hour, a test fix was usually supplied before the weekend was out and the customer would have shipped their statements on time. Now if you were that customer, would you be happy with your 24 X 7 development support?
I have one last comment, I find it interesting that a Japanese company named Toyota can produce a superior car with American workers and the CEO only earns 1.5 million dollars a year and an American company named GM pays their CEO 30 million dollars a year, uses foreign labor and produces cars with twice the number of defects per thousand cars shipped. I personally believe that the real problem in this country is the inept management running our companies, they cost more, create more headaches and redtape and then pass the blame down to the engineers and those doing the real work.
When will it stop? Enron continues to go on and on and on, this time the management is pushing the blame on the engineers and replacing them with foreign workers when the real responsibility and problem lies with them, they are the ones who agreed to all the extra work for the products, not the engineers and yet they take no responsibility for their own actions. And lastly, you think the stockholders will see any of the benefits from these costs savings via a dividend? Or do you think the execs will give each other bonuses?
51 posted on 08/03/2003 1:26:37 PM PDT by samuel_adams_us
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To: daviddennis
Competing with Japan is TOTALLY different from competing with China or India. Their society is much more comparable-- making the issue about quality. Businesses are just taking advantage of slave labor wages. That is not a contest of quality. We have no desire to win a war with China or India concerning who can pay their workers the closest to nil.
52 posted on 08/03/2003 7:14:24 PM PDT by GraniteStateConservative (Putting government in charge of morality is like putting pedophiles in charge of children.)
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To: RockyMtnMan
We can come up with the new ideas, but the system still has to change because it'll give us the same result-- people spending thousands training and working for about 3 years on the technology before it is moved to China or India (after having been trained by Americans). It's crazy to expect our economy to come up with a technological revolution every year. They are called revolutions because they don't happen all that often.
53 posted on 08/03/2003 7:18:41 PM PDT by GraniteStateConservative (Putting government in charge of morality is like putting pedophiles in charge of children.)
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To: DHerion
What we should be committed to is having the issue be quality. We can compete if the issue is quality. We can't nor shouldn't compete on who can pay their workers so few wages that they have to house 10 to a home- like they do overseas. We should have free trade only with comparable societies. I don't see how that's so odd of a notion.

I think we are overregulated and such, but you can chop all that off and we still couldn't compete for IT jobs when the salaries in India are $6K per year. Talk about deflation.
54 posted on 08/03/2003 7:23:22 PM PDT by GraniteStateConservative (Putting government in charge of morality is like putting pedophiles in charge of children.)
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