Posted on 04/18/2005 6:37:40 AM PDT by A. Pole
These are not the halcyon days of the Republicans' champion of open borders and free trade, Jack Kemp.
The "Minutemen," who appeared in Cochise County, Ariz., April 1 to highlight the invasion President Bush will not halt, are being hailed by conservative media and congressmen as patriots, as they are dismissed by the president as "irrational vigilantes."
Comes now the trade shocker for February. The deficit hit an all-time monthly record: $61 billion. The annual U.S. trade deficit is now running at $717 billion, $100 billion above the 2004 record.
Smelling political capital, Hillary Clinton and Chuck Schumer are co-sponsoring a 27 percent tariff on goods from China. Beijing ran a $162 billion trade surplus with us in 2004 in what trade expert Charles McMillion calls "The World's Most Unequal Trading Relationship."
The waters are rising around the Kemp Republicans. For these gargantuan deficits are sinking the dollar, denuding us of industry and increasing our dependence on imports for the components of our weapons, the necessities of our national life and the $2 billion in borrowed money we need daily now – to continue consuming beyond our capacity to pay.
Brother Kemp is correct in his Washington Times column in saying Beijing has not been manipulating its currency. China fixed the value of the renminbi at eight to the dollar in 1994, just as we once tied the dollar to gold. Beijing rightly objects, "It is not our fault your dollar is sinking."
But here, the free-traders enter a cul de sac. They recoil at tariffs like Lucifer from holy water, but have no idea how to stop the hemorrhaging of jobs, technology, factories and dollars, except exhortation and prayer. For as 19th-century liberals, they believe free trade is "God's Diplomacy." Whoever rejects it sins in the heart. True believers all, they will ride this raft right over the falls and take us with them. This unyielding belief in the salvific power of free trade is, like socialism, one of modernity's secular religions.
As Kemp's column testifies, these folks are as light on history as they are long on ideology. Kemp claims "there is no demonstrable instance in economic history where nations were made worse off by free and open trade. There are only the doomsday scenarios spun out of the imagination of half-baked economists ..."
But between 1860 and 1914, Great Britain, which began the era with an economy twice the size of ours, ended it with an economy not half the size of ours. Britain worshipped at the altar of free trade, while America practiced protectionism from Lincoln to McKinley to Teddy Roosevelt to Taft. Tariffs averaged 40 percent and U.S. growth 4 percent a year for 50 years.
Bismarckian Germany did not exist in 1860. But by 1914, by imitating protectionist America, she had an economy larger than Great Britain's. Were it not for protectionist America shipping free-trade Britain the necessities of national survival from 1914 to 1917, Britain would have lost the war to Germany, so great was her dependence on imports. A real-life "doomsday scenario," thanks to a few dozen German U-boats.
Jack Kemp notwithstanding, protectionism has been behind the rise of every great power in modern history: Great Britain under the Acts of Navigation up to 1850, the America of 1860 to 1914, Germany from 1870 to 1914, Japan from 1950 to 1990 and China, which has grown at 9 percent a year for a decade. As China demonstrates, it is a mistake to assume free trade, or even democracy, is indispensable to growth.
Kemp trots out Smoot-Hawley, the 1930 tariff law, for a ritual scourging, suggesting it caused the Depression. But this, too, is hoary myth. In the 1940s and 1950s, schoolchildren and college students were indoctrinated in such nonsense by FDR-worshipping teachers whose life's vocation was to discredit the tariff hikes and tax cuts of Harding and Coolidge that led to the most spectacular growth in U.S. history – 7 percent a year in the Roaring Twenties. Under high-tariff Harding-Coolidge, the feds' tax take shrank to 3 percent of GNP.
As high tariffs and low or no income taxes made the GOP America's Party from 1860 to 1932, the Wilsonianism of Bush I and Bush II – open borders, free trade, wars for global democracy – has destroyed the Nixon-Reagan New Majority that used to give the GOP 49-state landslides. Bush carried 31 states in his re-election bid. He would have lost had Democrats capitalized on the free-trade folly that put in play, until the final hours, the indispensable Republican state of Ohio.
Kemp calls China our trade partner – surely a polite way to describe a regime that persecutes Catholics, brutalizes dissidents, targets 600 rockets on Taiwan, lets North Korea use its bases to ship missile and nuclear technology to anti-American regimes, and refuses to denounce racist riots designed to intimidate our Japanese allies.
As some on the Old Right have said since Bush I succeeded Reagan, open borders, free-trade globalism and wars for democracy are not conservatism, but its antithesis. And they will drown the GOP.
The Republicans jumping off the raft into the river and swimming desperately for shore testify to it more eloquently than words.
Wow -- that's a great piece of information!
Keep in mind that European countries may not have the same attitude about Chinese imports that the U.S. does, so a weak Chinese yuan may not do them all that much good in a European export market.
I would list excessive regulation, taxation, abuse of civil courts, etc. as even bigger influences in the loss of U.S. jobs and industries than cheap competition from China.
A couple of years ago I predicted right here on this forum that the EPA's decision in the General Electric case in upstate New York would have devastating consequences on the long-term industrial base of this country, and everything I've seen since then confirms this. I could provide details if you'd like.
I read a fascinating article on the subject of the British Empire a couple of years ago. A thorough analysis of British history shows that by almost any economic measure, British colonialism was one of the worst investments in the history of mankind.
See #204. Having colonies is not the same as annexing states.
See #204.
That's a lot of nonsense. When adjusted for inflation and technology, cars are actually much cheaper today than they were in 1970. If you were to build a 1970-vintage automobile today in a mass-production process, you'd probably be able to sell it for about $5,000.
The reason a new car costs more today (in terms of purchasing power of the average U.S. worker) than in 1970 isn't a decline in our standard of living -- it's the exponential growth in high-tech components on these cars. Think of all the things that are standard equipment on cars today that didn't even exist back in 1970. And then add to it the fact that just the computing power in a car today was only available in a mainframe computer back then -- which means that by today's standards your 1970-vintage automobile would have to be a dump truck just to carry the equivalent of today's electronic components.
This is not true at all. The reason those industrial jobs left Pennsylvania for North Carolina was that PA and NC were not playing by the same rules. Industrial jobs left the Northeast for other parts of the U.S. precisely because people living in those other parts of the U.S. had a lower standard of living (and therefore were willing to work for less money and/or worse working conditions than their counterparts in the Northeast).
The primary force behind the movement of jobs overseas has not been "cheap" competition from overseas, but the elimination of socio-economic variations right here in the U.S. between different geographic regions. The demise of the U.S. as an industrial power began once these variations in economics and working conditions were gradually smoothed out by Federal legislation/regulations like OSHA, Social Security, minimum wage laws, labor laws, etc.
Sound economics ? It is the free trade argument that is based on pie in the sky wishful thinking. It is the free trade argument that has proven historically wretchedly wrong. Free trade, like utopian socialism, is a textbook theory that just plain doesn't work in the real world because real nations will not sacrifice their power and standard of living for pie in the sky promises of future benefit. When people have decided that cheap imports are not worth losing good jobs the whole structure collapses.
I would list excessive regulation, taxation, abuse of civil courts, etc. as even bigger influences in the loss of U.S. jobs and industries than cheap competition from China.
Nonsense. China has the worst industrial pollution in the world. I read that some 1500 Chinese coal miners died this year in accidents. Do we want the safety and environmental laws of 1900 in order to "compete" ? Do we want to bring back the good old days of the Triangle Shirtwaist Factory fire and company police and company towns and being paid in company scrip at the company store ? And even if we did that would not change the massive wage differential that Joe Sixpack just plain can't compete with.
By any standard you wish to use, non-college educated American workers are worse off than they were thirty years ago. Half the labor force has gone down. A McJob at Walmart just plain doesn't equal the unionized factory job with health insurance, vacation, and pension of thirty years ago.
More free trade nonsense.
You argue that adjusted for inflation the price of a car is cheaper than it was in 1970 then argue that because of more technology they are actually more expensive. Which is it ?
The 1970 vintage car is what is not on the market. The present day one is. If you compare what a VW beetle cost in 1965 with what a Kia costs today, adjusted for inflation it is about the same. If you compare a midsize sedan of 1965 with a midsize sedan of 2005, adjusted for inflation it is about the same. Since by category the price of the car has remained constant, then the variable is the purchasers income which has dropped to the point where a car loan must be 6 years FOR THE SAME MONEY where then it was 3 years.
Nobody says it better ...... than PJB!
Yeah, obvious to anyone that it trumps slave labor.
OK, here's my position on free trade. I don't profess to be an expert on the subject, perhaps none of us are. I am doing my best to understand it to some extent, though, and learning from these discussions. Surely, some of our points of view are basically different. I hope some of you will find the following reasonable, if you don't, good enough.
I entered this discussion after noticing that free traders were being likened to Karl Marx. I'm not even close to being an economics expert, but I do know enough to understand that Marx was no free trader, quite the opposite. In fact it is basic to socialist philosophy that economies must be managed, wages and prices set by the state.
But as far as I am concerned, there probably are legitimate reasons to restrict free trade from time to time, though I am certain that, as always, government intervention in the economy is normally is like a roll of the dice, the results will be unpredictable, usually negatively. Not to mention the implications for freedom of the use of one's own capital and the effect on the country of the loss of that freedom. And I would note that business entities exist for the sole or primary purpose of enriching their owners or stockholders, not for the advancement of social justice and arbitrary standards of living. When their existence does become justified by the advancement of social justice, etc., then we will truly be living in a socialist world.
However, there are surely industries that we want to protect (Some examples might be auto and aircraft manufacturing, shipbuilding, and of course IT) and keep within our shores for national security's sake. And there are countries whose best interests do not lie with our own. In those cases it seem to me that trade restrictions would be a legitimate tool of foreign policy.
But I do not mean to imply by this that our government should be in the business of protecting artificially set wages and prices. I think GM is an example, wages and benefits set by unions, combined with bad policy by management are likely the causes for her predicament today. While it's undoubtedly in our national interest to keep GM on her feet, it's not in our national interest to reward her mistakes.
As for Pat Buchanan's assertion that protectionism was responsible for the ascension of the UK and free trade her demise, I have my doubts, but await education from someone more knowledgable. But my feelings are that the greatness of the UK and the US were acheived more because of the free markets that were intrinsic in their societies than because of economic policies designed by politicians. I'd give credit to the decline of the UK more to her adoption of socialism. This is admittedly simplistic, lots of other factors here, not the least of which are the acquisition and loss of empire and the two world wars.
A brief recap of my own position: as a believer in the free market, I am obliged to believe as well in free trade, since we must trade, but recognizing that in the real world, free trade in a pure sense is not practicable too often and likely has never been practicable in a broad sense.
There was much less difference between states, business wise, than there currently is between any state and China. We had federal labor and minimum wage laws long before manufacturing started moving to China. There were, and still are, wage differences between states -- some are "right to work", and some are union states. The states have been equally subject to federal laws for several decades. The EPA was founded in 1970 under Nixon. OSHA was also founded in 1970. Social Security has been around since FDR. The federal income tax has been around (our neck) since 1913. China has none of this.
What is drastically different is that Congress has been handing over its authority on a variety of issues to unelected global treaty organizations during the last couple of decades. They've been raising our taxes and spending like drunken sailors, while they vote to strangle every industry in our country. Maybe this is their roundabout way to convince the people to lobby for less regulation and taxes, but it will probably get much worse before it gets better.
What is a "good job" by your standards, and how many of these are U.S. workers likely to have if we had a fully "protected" system of trade for them?
Do we want the safety and environmental laws of 1900 in order to "compete" ? Do we want to bring back the good old days of the Triangle Shirtwaist Factory fire and company police and company towns and being paid in company scrip at the company store ?
I agree with you 100%. But if you go back and look at the 1860-1914 period in U.S. history that Pat Buchanan describes in such positive terms, you'll find that all of these things were very typical of the United States in that period.
The United States was a strong agricultural and (later) industrial power for much of its history. However, these periods of dominance in these sectors were marked by several characteristics that made economic strength possible on a national level but at a terrible human cost. These include the following:
1. Slavery.
2. "Free" land (i.e., western expansion).
3. Exploitation of immigrant labor (during the peak of the industrial revolution).
4. The aftermath of global warfare that decimated all other industrial nations (post-WW2).
5. "Free" infrastructure (implementation of the Interstate Highway System in the 1950s).
So I would ask you -- and Pat -- the same question: Which of these periods would you like to go back to, in order to rekindle the industrial strength of this great nation?
Because of free trade, Britain did not have the industrial plant to equip mass armies in two world wars.
It comes down to whether the national good is more important than the free market. I don't hold the free market to quite the level you do as the highest good. The free market, left unfettered, would give us prime time hard core pornography, child prostitution, and strip joints. And is destructive of conservative cultural values. Viacom through MTV has done more to advance the homosexual agenda than any politician ever did. Yes, the free market must be subordinated to higher goods and it is the job of the political process to do that, as it comes under "promote the general welfare".
The societal effects of free trade have been like a gangrene creeping up from the limbs. The first impact was the destruction of the light industrial, low skilled factory jobs that enabled the Irish and Italians to climb out of the ghetto at precisely the moment Blacks were about to use them to do so. Is a ghetto underclass and the destruction of our cities an acceptable price for free trade ? Is it an accident that at precisely the moment those jobs were being destroyed crime exploded in America's cities ? Idle young men means trouble. What did the explosion of crime in the 70's and 80's cost America weighed against the "benefits" of cheaper labor costs overseas ?
Then it was skilled factory workers turn. Now, it is white collar professionals.
Pat Buchanan isn't describing the America of 1860-1914 in glowing terms, just the protectionist policies that enabled America to build the greatest industrial base in the world. It is a given in history that the industrial superpower of today is the financial and military superpower of tomorrow.
The abandonment of protectionism was intended to enable the world to rebuild after 1945. For a while, we had good times. Then in 1970, it began to bite us in the ass.
The best response to our situation would be an imposition of tariffs on China simply to protect what is left of our industry and while the dollar is still worth something.
light industrial, low skilled factory jobs......
Your whole post is right on. I've seen the decimation of light industry in the North East
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