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.

[RLK]

As a result, in 1973 trade as a percent of GNP began to increase. When it did real wages began to fall. From 1973 to 1991 wages fell 19% and are still dropping.

------------------------------

If you look at real wage increases and everything else, there is a flattening of the curve in about 1873. That is the year when the economy last performed well.

[Mortimer Snavely]

"....I believe this borders on treason as much as anything else would. The people who are destroying US jobs to send them overseas should be put in prison. "

I agree. Of course, it depends on the jobs, but the jobs now being exported (yes, that's right, Walter Williams, exported) are necessary for our national security.

Without machine tools a nation is of no consequence.

[DoughtyOne]

I agree with where you were headed there, but I go farther than that.

Our nation was second to none in 1988. We did not experience the outsourcing and trade deficits of $500 billion per year. We weren't allowing millions of illegals to flood across our borders either.

I said it once, I'll say it again. All out war has been declared on the citizens of the United States by their own government and this nations corporate and business management concerns. If you're making a decent wage in this nation, someone is looking for a way to dump you.

If we were successful in 1988 without doing this, then what is going on today is criminal in nature as far as I am concerned.

[dennisw]

http://www.freerepublic.com/focus/f-news/984169/posts?page=56#56

Walter Williams:

There's the bugaboo about trade deficits, as in complaints that we buy more from Japan than they buy from us. That's not only mythology, but it's not true. Let me use domestic trade to make my point. I buy more from my grocer than he buys from me, but is there a "trade deficit?" When I buy $100 worth of groceries, the value of my current account(goods) rises by $100 but the value of my capital account(money) goes down by $100. By the same token, the grocer's current account(goods) goes down by $100 and his capital account(money) rises by $100. There's no trade imbalance whatsoever; I've given him $100 worth of value and he's given me $100 worth of value. Similarly, when a Japanese automaker sells us a $15,000 car, his current account goes down by $15,000, and ours goes up. He might purchase $15,000 worth of AT&T stock instead of buying California oranges. But just as in the grocer example, his capital account rose by $15,000 and ours goes down.

56 posted on 09/17/2003 11:46 AM EDT by LIBERATENJ

 

What is the enormous flaw in this argument?

#1 If you go $200,000 into debt on credit cards you will have to pay it back plus interest. You pay to "rent" this money. Same with the USA if we buy so much more from China and they hold US Treasuries rather than spend it, which in fact is what they do. Once more interest is collected as it is from all debtors.

#2 Let's say you own two busy auto repair shops. You can sell one for $200,000 and be debt free. Same for the USA. The Chinese can take $100 million of the US Treasuries they hold and buy some productive assets in the USA. Could be farms, factories, income producing real estate what have you. ChiComs sure don't buy much finished products from us.

#3 The key here is the difference between going into hock to buy finished products and owning an asset that produces profit or income. Sadly enough the ChiComs have an income producing asset even when they just hold Treasury bonds. It's about finished products versus assets.

[Alberta's Child]

Though the word "economy" is not in the Constitution, the public expects the president to be "manager of the economy."

Good point.

My major problem with Buchanan's views on this issue is that they don't take into account some very serious "institutional" factors that keep the U.S. at a great disadvantage when dealing with other nations in terms of trade. I would cite environmental regulations, a strong U.S. dollar, a cumbersome regulatory environment, etc.

In 15 minutes I could come up with a plan to reduce the U.S. unemployment rate to 0%, but nobody here would be very happy about it. For one thing, we wouldn't be able to post on FreeRepublic anymore, since we would no longer have personal computers and all electrical generating capacuty would be dedicated to industrial use.

When it comes to discussing any issues related to the U.S. economy, nothing bothers me more than simple, naive solutions.

For example, I wonder how many of those 160,000 manufacturing jobs were lost in Ohio as a result of steep cost increases in raw materials brought about by the tariff the Bush Administration imposed on foreign steel two years ago.

[Alberta's Child]

Excellent post. You might also add that the U.S. has lost this tariff dispute with Canada every time it has come up before a trade board for NAFTA or GATT. So not only were 300,000 people priced out of the market for new homes, but at the end of the day, the U.S. taxpayer is going to have to pay billions of dollars in refunds and fines to lumber producers in Canada.

[A. Pole]

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.

Are you serious proposing Argentinian model for USA?

[harpseal]

That article was posted on Free Republic and is available by searching the archives. The simple fact is that these companies have entered into a faustian bargain for some immediate profit that is doubtful in its materialization which will destroy them later. It is not just automobiles either it is every high tech industry which has moved to China which is facing the loss of its technology without compensation.

[bimbo]

I'm not sure what party you should vote for ...

I don't vote for any "Party," I vote for whom I understand to be the best "individual."

[ninenot]

Uhhhh---go to www.samnow.org, a grass-roots employer/owner/worker group founded SPECIFICALLY to advocate (inter alia) tariff hikes for at least the short-term.

And in Pennsylvania, the small/medium sized businesses have a similar organization, agitating for the same thing.

The question is the longer-term plan. For practical purposes, the USA has never really had a trade policy and the Harvard/Wharton 30-somethings we've sent to Japan (e.g.) to negotiate trade agreements have NO KNOWLEDGE OF TRADE AGREEMENT HISTORY--as pointed out by AmerinTok.

As a result, this country has literally taken the same 'bargaining chip' from Japan three times in a row!!!, with the Japanese offering it each time as though it were a brand new idea. The idiot MBA's bought it each time, and of course, returned an American concession.

No surprise that we woke up about 12 months ago finding that "our" trade representatives had given away our entire patrimony.

[ninenot]

protection such as a tariff is the perfect refuge from foreign competition.

Let's dispose of this horsehockey immediately.

The high cost of manufacturing in the USA is principally due to Government regulation and taxation. Another part, not nearly as significant, is due to over-lawyering.

Gummint regs can be broken into two parts, albeit roughly: those pertaining to social justice such as FLSA (wages, hours), ERISA, (pensions/retirement) and to some extent OSHA and EEO. The second part of regulation is largely concentrated in the area of "desirables" such as environmentals--Clean Air, Clean Water, zoning restrictions.

Your argument uses the same logical fallacy as the argument that the USA caused 9/11, that is, that the Gummints of the USA and China are moral equals.

In fact, they are not so. The Gummint of China is damn near the inverse. It actively subsidizes all industrialization; it treats its citizens as chattel (when they are allowed to live;) it enables and promotes the theft of intellectual property; it has ZERO environmental standards, and by the way, does not tolerate a "lawyer class" bent on collecting judgments for ridiculous claims.

Thus, your "moral equivalence" argument is void.

Many of us believe that the FIRST obligation of the US Government is to its citizens--NOT the citizens of China, Japan, Spain, or Pago-Pago. We do not argue that our Government should smash the economies of other countries--merely that our Government PROTECT OUR INTERESTS.

Since our Government has seen fit to make the USA the "high cost producer," it is the Government's obligation to remedy those costs through a flexible, targeted tariff policy.

Please note that I stated the Government's FIRST concern is US Citizens, meaning that FLSA, ERISA, and (arguably) EEO are "off the table." Thus, the tariff should begin with those items, adding the cost of taxation and enviro concerns as secondary/tertiary elements.

For you to claim that seeking redress is "rent-seeking" is spurious. There is NO OTHER ENTITY who has created the problem--thus there is NO OTHER ENTITY which can solve it.

[LIBERATENJ]

I've written a nationally syndicated column for nearly 25 years. Columns critical of Social Security and handouts to farmers
used to bring the angry self-serving mail. Now it's international trade. Let me address some of the issues raised.

First, it's misleading to say that the U.S. trades with Japan, China, or England. Does one really think that the U.S. Congress
trades with England's Parliament or the Japanese Diet? When I purchased my Lexus, I dealt with a Japanese producer through
an intermediary, the auto dealer. To my knowledge, the U.S. Congress and the Japanese Diet had little to do with the
transaction save attempts to sabotage it through regulations and taxes.

Now the question: what moral standard justifies third party use of force to prevent an American from exchanging with
whomever he pleases, whether that person lives in Montana, Mexico or Japan? Some might rejoin: through trade restrictions,
other countries don't permit their citizens to trade freely. That's true but should we support the notion that, for example, since
the Japanese government doesn't permit its citizens to be free the American government should retaliate by denying its citizens
the right to trade freely?

Is your answer yes or no?

Here's another thought to ponder upon. Because of restrictions on the importation of rice, so as to benefit rich Japanese
farmers, Japanese citizens pay four times the world price for rice. Should Congress retaliate by creating restrictions forcing
Americans to pay four times the world price for rice or some other commodity? Yes, or no?

One writer lamented that there's a deal in the works to permit Vietnam to sell millions of cotton shirts and slacks to Americans.
"But we never hear about what Vietnam will buy from us." Let's look at this. When a Vietnam producer sells an American a
shirt, he gets dollars in return. What's he going to do with those dollars; hide them in a mattress, paper the wall with them, or
just cherish them? It'd be great if foreigners did that; we'd have near heaven on earth. We'd simply put a few Americans to
work printing dollars and the rest of us could live lives of Riley whilst the rest of the world labored and shipped us Lexus,
Mercedes, caviar, steel, clothing and other life-comforting goodies all in exchange for these wonderful little slips of paper called
dollars.

Unfortunately, that doesn't happen. That Vietnamese producer might use those dollars to purchase something from a German
producer. The German producer might use the dollars to purchase something from a Japanese producer. People willingly
accept those dollars because ultimately they represent a claim on something in America. You might ask, "Okay, Williams, I go
along with what you're saying so far but if that's true how come we're running a large balance of payments deficit?"

Do a web search for major foreign holders of U.S. Treasury securities. As of June 2003, foreign holdings of U.S. Treasury
bonds totaled $1.347 trillion. Japan is the largest holder with $441 billion, followed by England with $122 billion and Mainland
China with $122 billion. Thus, dollars are coming back to America, in this case to help sponsor Congress's profligate spending.
Also, we mustn't forget that foreigners also use their dollars on Wall Street to purchase stocks, bonds, and other financial
instruments. All the nonsense we hear about balance of payments deficit ignores the fact that there are two types of accounts: a
goods and services account and a capital account. Any imbalance in the goods and services account is offset by the capital
account (stocks and bonds). The bottom line is that free trade, while it might mean painful adjustments for the few, benefits
immensely the many through cheaper prices and wider choice.


Walter E. Williams
c37-03
August 25, 2003

[ninenot]

The Japs will have economic troubles until they learn that children ARE important to the economy. Has nothing, whatsoever, to do with OTHER Jap policies--except that the other policies simply re-inforce the birth dearth.

[MrLeRoy]

a $550 billion trade deficit kills 11 million production and manufacturing jobs.

He thinks there'd be ELEVEN MILLION more production and manufacturing jobs if we were thorough protectionists? What obvious nonsense.

[ninenot]

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.

The USGovernment, though enviro-policy, has jacked up the price of DOMESTIC lumber.

And in the specific case, there is no benefit accruing to the domestic industry--because domestic lumber is virtually 'off-limits' to cutting.

So the Gummint in its own inimitable way has deprived our loggers of a living AND has raised the cost of imported lumber.

At some point, you must understand that the USG is not necessarily our friend.

[ninenot]

I'm waiting for your response: would Bill Gates have accumulated $50Bn in assets had he begun the Company in PRC?

The government - representatives of WE THE PEOPLE tried to destroy what he built.

There is little about the Clinton/Reno action which is admirable. At least Gates was not treated the same as the Waco inhabitants, eh?

I do not claim that the Government is the "friend" of either industry nor citizens of the USA.

However, it is in the interests of the CITIZENS, not MSFT, nor F, T, (etc.) on which the Government should act. When the interests of F, MSFT, T and the citizens are IDENTICAL--so much the better for the firms.

[ninenot]

Yes, there is a hell of a difference between capital assets and current assets--except to Libertarian economists who are tenured and can run that sleight-of-hand past people like TxDg who claims several years of Econ education (but obviously not Accounting 101.)

[hchutch]

Your question is irrelevant.

The fact is, the bulk of the productive jobs are created by Big Business. MSFT, AT&T, GM, Ford, etc.

People don't do business with entities that treat them like dirt, and for too long, this country - including we the people - have treated businessmen like dirt. Business has found they can now take their jobs and other stuff elsewhere to places they will NOT be treated like dirt.

We're only reaping what we have sown since the Great Society with class envy. We the people, through our elected representatives, created a hostile business climate in this country - and we the people, through elected representatives, had better get to making America a place where people will WANT to do business.

Why do you refuse to acknowledge this fact? Why do you continue to demand the false solution of tariffs? Why do you persist in ignoring the real problems?

[Texas_Dawg]

The Japs will have economic troubles until they learn that children ARE important to the economy. Has nothing, whatsoever, to do with OTHER Jap policies--except that the other policies simply re-inforce the birth dearth.

.