Patrick J. Buchanan Examines "The Slow Awakening of George W."

Washington Times ^ | 09-17-03 | Buchanan, Patrick J.

[Theodore R.]

The slow awakening of George W.

-------------------------------------------------------------------------------- Posted: September 17, 2003 1:00 a.m. Eastern

© 2003 Creators Syndicate, Inc.

Last July, U.S. Trade Representative Bob Zoellick delivered a halftime pep talk to dispirited globalists, thrown on the defensive by the hemorrhaging of U.S. manufacturing jobs.

"What ... a surprise," Zoellick railed at his troops, "to see that the proponents of [free trade] ... have so often abandoned the debate to the economic isolationists and purveyors of fright and retreat."

But by September, Zoellick's own boss seemed to be drifting toward the camp of the "economic isolationists and purveyors of fright."

At a rally in Ohio, which has lost 160,000 manufacturing jobs since mid-2000, President Bush railed: "We've lost thousands of manufacturing jobs because production moved overseas. ... America must send a message overseas – say, look, we expect there to be a fair playing field when it comes to trade."

Yes, friends, at long last, we have their attention.

What's behind this radically revised presidential rhetoric? It is this: U.S. manufacturing jobs are vanishing, and unless he turns it around, Bush's presidency may vanish along with them.

The numbers are breathtaking. Manufacturing jobs have been disappearing for 37 straight months. Not since the Depression have we lost production jobs three years in a row. Since 2000, one in every six manufacturing jobs, 2.7 million, has disappeared. These jobs paid an average wage of $54,000.

Unfortunately for President Bush, while he has a good heart, he was horribly miseducated at Harvard. He simply cannot comprehend that it is free-trade globalism that is destroying U.S. manufacturing jobs, and may yet destroy his presidency.

The serial killer of manufacturing jobs is imports, which are now equal to almost 15 percent of GDP, four times the level they held between 1860 and 1960. What has caused this flood of imports? The trade deals that people like Robert Zoellick negotiate and George W. Bush celebrates.

Consider the numbers.

In July alone, the United States exported $86.1 billion in goods and services. But we imported $126.5 billion, for a trade deficit of $40.4 billion. The total trade deficit for 2003 is estimated at between $480 billion and $500 billion. But the deficit in goods will run closer to $550 billion.

The president's father and Bill Clinton contended that every $1 billion in exports created 20,000 jobs. Thus, a $550 billion trade deficit kills 11 million production and manufacturing jobs.

Say goodbye to blue-collar America.

What is the Bush prescription for curing this metastasizing cancer? In Ohio, he declared, "See, we in America believe we can compete with anybody, just so long as the rules are fair, and we intend to keep the rules fair."

How, Mr. President?

Consider the nation that runs the largest trade surplus with us. In July, we bought $13.4 billion in goods from China and sold China $2.1 billion. U.S. imports from China this year should come in around $160 billion, and U.S. exports to China at $25 billion.

We will thus buy 10 percent of the entire GDP of China, while she buys 0.25 percent of the GDP of the United States. Is this "fair trade"? But how does Bush propose to close this exploding deficit? How can he?

Where a U.S. manufacturing worker may cost $53,000 a year, a factory in China – with $53,000 and using the same machinery and technology as a U.S. factory – can employ 25 reliable, intelligent, hardworking Chinese at $1 an hour.

If you force U.S. businessmen to pay kids who sweep the floor a $5-an-hour minimum wage, while their rivals pay highly skilled Chinese workers $1 an hour, how do you square that with the 14th Amendment's guarantee of equal protection of the laws?

Does the president, when he goes on about keeping "the rules fair," mean he will insist that China start paying its skilled workers $25 an hour and subject their factories to the same payroll taxes, wage-and-hour laws, OSHA inspections and environmental rules as ours?

Beijing will tell him to go fly a kite, Made in China.

It is absurd to think we can force foreign nations to accept U.S. rules and regulations on production and American standards on wages and benefits. And why should foreign nations comply, when – with their present policies and laws – they are looting our industrial base and walking away with our inheritance?

The men who have custody today of what was once the most awesome manufacturing base the world had ever seen are ideologues, impervious to argument or evidence. Like the socialists of Eastern Europe, zealots like Zoellick are beyond retraining. They are uneducable. They have to go. The sooner they do, the sooner we can get about rebuilding the self-sufficient and sovereign America they gave away.

[JohnSmithee]

"Like many before you, and including Pat Buchanan, you confuse the passing pain of a recession with a shift in fundamentals. Yes, the recession of 2001 and the slow recovery have been especially hard on the manufacturing and high-tech sectors, but neither is in danger of disappearing."

This seems to be in contradiction to what many economists have been saying for the last year or so. I keep hearing that these are structural changes to the economy, that these jobs are not coming back, yada yada yada.

As far as manufacturing and the IT industry disappearing, they may continue to exist on a global scale, but they certainly are slowly disappearing in this country (USA). Again, this seems to be the universal opinion of the economists that I have read. Since the CIOs of many companies are pursuing outsourcing, I would be shocked if that didn't have a signficant negative impact on the IT industry of this country. Perhaps you merely mean the "industry" as reflected in the equity value of American companies, and not actual American IT workers?

[Barnacle]

I could read only about half of this and had to stop before I puked.

How could anyone be so stupid to have practiced the trade policies we've had. It's suicide! It gives me no satisfaction to say, "I told you so." The ramifications of this disasterous and reckless excapade are too serious for that.

Why is it that no one and I mean no one talks about an obvious remedy - tarrifs?

[JohnSmithee]

"Trade with China allows our economy to shift production to those products and services where we enjoy an even greater advantage, raising our overall productivity."

Can you name some of these products and services?

[Recourse]

Let's be realistic. It's not going to improve anytime soon for blue-collar workers in PA or Ohio. Did you know that the population in Cleveland was greater in 1950 than it is now? In 1950, it was over 900,000. In 2000, approximately 470,000. Cleveland, Pittsburgh, and Philadelphia have all suffered marked population decline due to suburbanization and because industry has moved south and west. Since 1950, St. Louis (59.0%), Pittsburgh (48.3%), Buffalo (46.6%), and Detroit (45.9%), have all had massive population declines.

[Recourse]

China's comparative advantage is a large, cheap labor pool for manufacturing, but a high human-to-land ratio. The United States' advantage is abundant farmland, which produces foods cheaply. These differences mean that U.S. food could be exchanged for China's manufactured products.

The benefits of trade are independent of cheaper wages in another country or the relatively cheaper price of imports. Think about it, if foreign governments chose to subsidize their exports to the United States (make them cheaper), they would, in effect, tax their own citizens to benefit US consumers.

There are always those producers that are more efficient, and those that are less so. For those high cost or inefficient producers and their employees, a protection such as a tariff is the perfect refuge from foreign competition.

This would thus ask consumers to pay higher prices for goods and services than are available to them through trade, thereby negating the potential expansion of trade benefits.

[JohnSmithee]

"Americans remain the world's leading exporters of manufactured goods. The United States today accounts for a steady 12 percent of global exports, the same share as two decades ago, and three times China's share."

So, the loss in manufacturing jobs could be accounted for by improvements in worker productivity? I wonder if some of these export statistics should be normalized according to labor by country for each company. If the CEO is an American, and yet his entire work force is Chinese, should this company properly be termed "American" or "Chinese"?

[Destro]

The Athenian gentry were confronted with this problem. They also feared what the have nots would do. Instead of going the route the republican Romans did - the bread and circus state- the Athenian gentry gave up a portion of their wealth and imposed "trade sanctions" (not really but close enough) to grow a new yoeman self sufficient farmer middle class--they called it the Hoplite class and the Hoplite dominated city state gave birth to the modern world.

Fair trade not free trade.

[Recourse]

"Fair Trade" is built on a faulty premise, which is that current protectionist measures are good for the United States, but we're willing to abandon them if other countries abandon theirs, since we really want to get into their markets. That is like saying, I'll agree to stop banging my head against the wall, but only if you stop banging yours. The implication is that it makes sense for me to bang my head, but I am willing to negotiate that asset away.

[ninenot]

If you think it's challenging now, take a look at this AutoNews item dated June 9, 2003: http://www.autonews.com/article.cms?articleId=44033 (sorry no HTML link)

Briefly--the Chinese want the automotives to turn over all their technology now utilized at in-China plants, to "share" with the PRC--and at least 50% of the 'built-in-China' content must be PRC-only.

[Texas_Dawg]

That is like saying, I'll agree to stop banging my head against the wall, but only if you stop banging yours.

Or, seeing China or Japan or whoever shoot themselves in the foot with bad economic policies and saying, "Hey! No fair! I must shoot myself in the foot too!"

These people were screaming about Japan not floating the yen, subsidizing its banks and industries, etc., over a decade ago, and yet we kept our markets open despite them, had a decade of economic boom while Japan is still struggling to turn around a miserable decade of economic decline.

[ninenot]

I am really having a hard time feeling sorry for Gates, as you do. Perhaps you should mail him a gift to make up for the abuse he has suffered here.

And tell us again: would he have accumulated $50Bn. in assets were he to have started in PRC?

We await your answer.

[Destro]

Fair trade for means you do business on an unrestricted basis (free trade) only with nations that have similar wage structures and laws.

I recognize that this will raise prices of consumer goods but no system is perfect, but the trade off is meaningful living wage employment.

At least that is how I see it.

[Recourse]

Here's an example of why tariffs are bad for the average American. The cost of some wood panel products is up more than 40 percent this year. It's one of the biggest such jumps since the early 1990s, when a spike in lumber prices put the housing sector into a frenzy.

The United States imposes an 18% tariff on softwood lumber imports from Canada. These trade restrictions add an estimated $50 to $80 per thousand board feet to the price of lumber, which drives up costs and shrinks profits for lumber users. The resulting addition of $800 to $1,300 to the cost of a new home prices some 300,000 families out of the housing market, denying them the dream of home ownership.

In effect, the U.S. Government lines the pockets of a few producers here at the expense of U.S. homebuilders and families who dream of owning their own homes.

[ninenot]

FDI (US in China): 1989: $200MM, 2000: $7.8Bn.

By the year 2000, FDI (all sources) in China: 1/3rd of ALL FDI from all sources worldwide.

The higher (by industry) the US FDI in China, the more the US-China trade deficit (e.g., electronics around $17Bn in 2000.) For every 10% increase FDI in China by US firms, there is a 6.3% increase in the level of imports from China to the USA--and NO significant effect on the level of exports from the USA to China.

(US Trade Deficit Review Commission, 2001)

[Barnacle]

The United States imposes an 18% tariff on softwood lumber imports from Canada.

We got our own stinkin' trees. Cut them rather than pollute the air when they go up in smoke.

Tarrifs are bad? Well, they were good enough to pay for the entire operation of the Federal Government until 1913 when Wilson said, "Hey, let's tax income. Oh, come on, just 2%." Sure, tarrifs bad, income tax good.

[Recourse]

As far I am concerned, tariffs bad, income tax bad, and sales tax bad.

[hchutch]

Your attitude is part of the reason we are dealing with outsourcing and offshoring.

Never mind the JOBS Bill Gates created in America, you can't feel sorry for a man who nearly had his company BROKEN UP by the government at the behest of his competitors by the government because he's RICH.

The government - representatives of WE THE PEOPLE tried to destroy what he built. And you are surprised that he decides to take jobs and stuff elsewhere, so as to ensure that his company will survive and be profitable?

We've sown the seeds of this trend, and now we're harvesting the effects of beating down on Big Business. Big Business is not going to take the abuse heaped on it any more.

[Recourse]

Despite substantial progress in the last 10 years, China's barriers to imports remain relatively high. Those barriers partly explain the bilateral surplus China runs with the United States, but the primary explanation is more benign: We like to consume the products China sells. In 1995 the Council of Economic Advisers concluded, "China's persistent surplus with the United States in part reflects its specialization in inexpensive mass-market consumer goods. China similarly runs bilateral surpluses with Japan and Europe for this reason." If China were to further open its market, America's bilateral deficit with China would probably shrink, but our overall trade deficit--determined by aggregate savings and investment--would remain largely unaffected. A rising dollar caused by increased demand for U.S. exports to China would lead to larger bilateral deficits (or smaller surpluses) with other U.S. trading partners. If the United States were to impose higher tariffs aimed at imports from China, that too might reduce the bilateral deficit, but not the overall U.S. trade deficit. Higher tariffs against Chinese imports would merely shift some of the bilateral trade deficit to other countries while raising prices for American consumers. In reality, larger trade deficits correlate positively with falling unemployment. The graph below illustrates how closely the unemployment rate corresponds with changes in the U.S. trade deficit. When the trade deficit expands, as it did in the 1980s, unemployment falls. When the deficit shrinks, as it did during the 1990-91 recession, the unemployment rate rises. As the trade deficit has expanded in the 1990s, the unemployment rate has fallen steadily. The unemployment rate fell in all but 2 of the most recent 14 years in which the trade deficit grew larger than it had been the previous year (1976-78, 1982-87, 1992-94, 1996-97). As an expanding economy creates jobs, it also creates demand for imports and for capital from abroad.

[Barnacle]

As far I am concerned, tariffs bad, income tax bad, and sales tax bad.

Yes. But the money is going to come from somewhere. If not, we'll have a deficit. Can you imagine if we had one of those? They can lead to dept.

At pressent, the Feds have spent enough of our money (Ses, it's our money. The government doesn't have any money. They only strong arm it away from us) that it wil take $60,000 from every taxpayer to pay it off.

Did you know that?

But, what's another $15 billion to Africa? After all that's what it cost to tell them not to stick things where they don't belong.

[Texas_Dawg]

Yes. But the money is going to come from somewhere. If not, we'll have a deficit. Can you imagine if we had one of those? They can lead to dept. At pressent, the Feds have spent enough of our money (Ses, it's our money. The government doesn't have any money. They only strong arm it away from us) that it wil take $60,000 from every taxpayer to pay it off. Did you know that? But, what's another $15 billion to Africa? After all that's what it cost to tell them not to stick things where they don't belong.

Sigh... (Oh man...)