Posted on 02/19/2016 6:56:22 AM PST by Kaslin
Republican hawks are aflutter today over China's installation of anti-aircraft missiles on Woody Island in the South China Sea.
But do these Republicans, good free-traders all, realize their own indispensable role in converting an indigent China into the mighty and menacing power that seeks to push us out of Asia?
Last year, China ran up the largest trade surplus in history, at our expense, $365 billion. We exported $116 billion in goods to China. China exported $482 billion worth of goods to us.
Using Census Bureau statistics, Terry Jeffrey of CNSNEWS.com documents how Beijing has, over decades, looted and carted off the greatest manufacturing base the world had ever seen.
In 1985, China's trade surplus with us was a paltry $6 million. By 1992, when some of us were being denounced as "protectionists" for raising the issue, the U.S. trade deficit with China had crossed the $10 billion mark.
In 2002, it crossed the $100 billion mark. In 2005, the $200 billion mark. In each of the last four years, Communist China has run an annual trade surplus at the expense of the United States in excess of $300 billion.
Total trade deficits with China in the Bush-Clinton-Bush-Obama era? $4 trillion. Total U.S. trade deficit in 2015 -- $736 billion, 4 percent of our GDP.
To understand why Detroit look as it does, while the desolate Shanghai Richard Nixon visited in '72 is the great and gleaming metropolis of 2016, look to our trade deficits.
They also help explain America's 2 percent growth, her deindustrialization, her shrinking share of the world economy, and the stagnation of U.S. wages as manufacturing jobs are replaced by service jobs.
Those trade deficits also explain the rise of Bernie Sanders and Donald Trump.
Yet, with the exception of Trump, none of the GOP candidates seems willing to debate, defend or denounce the policies that eviscerated America -- and empowered the People's Republic.
Workers, however, know what our politicians refuse to discuss.
They are being sold out for the benefit of corporate elites who pay off those politicians with the big cash contributions that keep the parties flush.
Politicians who play ball with Wall Street and K Street know they will be taken care of, if they are defeated or when they retire from public office, so long as they have performed.
Free trade is not a zero-sum game. The losers are the workers whose jobs, factories and futures are shipped abroad, and the dead and dying towns left behind when the manufacturing plants shut down.
America is on a path of national decline because, while we have been looking out for what is best for the "global economy," our rivals have been looking out for what is best for their own nations.
Consider OPEC, which is reeling from the oil price collapse. Russia is colluding with Saudi Arabia and Iraq to cut production to firm up the market and prevent prices from falling further.
This is pure price fixing, but we all understand self-interest.
What might a U.S. national-interest-based trade policy look like?
Controlling the largest market on earth, we might impose on foreign producers a cover charge, an admissions fee, a tariff, to get into our market.
Example: Impose a 20 percent tariff on foreign cars entering the USA. This might raise the cost of a Lexus or Mercedes produced and assembled abroad from $50,000 to $60,000.
However, if Lexus or Mercedes buys or makes all their parts in the USA and assembles all their cars here, no tariff. Their cars could still sell for $50,000. This would be a powerful incentive to shift production here. As an added incentive, all tariff revenue could be used to reduce or eliminate corporate taxes in the USA.
Between the Civil War and World War I, under Republicans, the U.S. became the world's greatest industrial power and a wholly self-sufficient nation. How? We taxed foreign goods entering the United States, but did not tax the profits of U.S. companies or the incomes of U.S. workers.
The difference between economic patriots and globalists who inhabit corporate-funded think tanks and public policy institutes is that the latter think of what is best for their corporate benefactors and the global economy. The former put America and Americans first.
Academics revere Adam Smith, David Ricardo and Richard Cobden.
But none of them ever built a great nation. Patriots look to Alexander Hamilton and those post-Civil War Republicans who built the greatest national industrial powerhouse the world had ever seen.
Indeed, what great nation did free trade ever build?
As father of a united Germany, Chancellor Bismarck said, when he decided to build Germany on the American and not the British model, "I see that those countries which possess protection are prospering, and that those countries which possess free trade are decaying."
So it is true today. Unfortunately, it is America, now wedded to the fatal dogma of free trade, that is decaying.
I’m tired of this merry-go-round with you...You are boring me...Go play with someone else...I’m through....
“Tell me we aren’t going downhill without any brakes.....”
And, you’re solution is to use tariffs to reduce our standard of living?
BTW, you didn’t answer my question about saving those high paying farm jobs.
First, the tariffs that Trump is suggesting will not reduce our standard of living...That is happening right now with our present government...
Secondly, there was no “question” in your “high paying farms” statement...Only a stupid comment that has absolutely nothing to do with today’s USA...
Which is more in demand, domestic oil at $32 or the $42 foreign oil?
“That VAT on imports is adding costs to imported goods to make up for VATs charged at various wholesale or other points before something is sold to the final buyer (of new goods)”
Yes, that’s my point. It levels the playing field between imported and domestically produced good with regard to the VAT. I think that’s entirely appropriate, but it doesn’t make the VAT a tariff. If we had a VAT, as some here advocate, then we would undoubtedly impose it on imported goods. Instrad, we have sales and use taxes which are imposed on the final consumers of imported goods.
A tariff by any other name, and definitely protectionism and anti-free trade, which I don't object to. This conversation started with this statement from you:
True, but the post-war Germany miracle, especially in the critical first ten years, was accomplished by embracing the free market principles of Ludwig Erhard, not the protectionist proposals of Pat Buchanan and Donald Trump.
No, the VAT applied to imports is a protectionist measure, designed to add tax costs incurred by German produced products at various stages of production, prior to becoming finished goods, to imported finished products. No different than calculating a tariff based upon another nation's lower labor costs, or lower environmental costs, to "level the playing field" when an exporter has lower labor and environmental costs than the importer.
And various nations used many different non-tariff and tariff-by-any-other-name methods as protectionist measures. True free trade allows NO schemes to add costs to imports because the exporter had lower costs in some area. That defeats the concept of comparative advantage, which is also fine with me.
By applying the VAT to imports at the point-of-entry, Germany is definitely NOT practicing free trade. Then, the imported product will properly have the VAT applied within Germany at other stages such as transportation, maybe wholesale and then retail.
It's fine with me if Germany and the EU apply a VAT to imports, but don't then claim that they are practicing free trade.
“First, the tariffs that Trump is suggesting will not reduce our standard of living...That is happening right now with our present government...”
A 45% increase in the cost of goods will not reduce our standard of living? Do you think we’ll also get a 45% increase in our wages?
“Secondly, there was no “question†in your “high paying farms†statement...Only a stupid comment that has absolutely nothing to do with today’s USA...”
The fact that you don’t have a good answer doesn’t mean the question was stupid. But, OK, here’s something more recent. When I was a lad, some of the best jobs for women were telephone operators. Those jobs are gone now. Should we have done something to protect those jobs?
And, another question. Read an article predicting that in a few years robotics could replace as many as 45% of current jobs. Should we ‘protect’ those jobs? If not, why not?
The VAT is a consumption tax, as are the sales and excise taxes we have in the U.S. It doesn’t matter, from that perspective, that the VAT is collected from businesses on their “value added” in the supply chain. We impose sales taxes on imported goods that are consumed here; is that a tariff? If so, the word has lost meaning. If the consumption of imports were untaxed, there would be a powerful incentive to consume imported goods rather than domestically produced goods. Is that what you advocate?
I see no solutions coming from the unfair free trade supporters.
Put up a plan or don’t whine when Trump follows his plan. BTW his plan is to negotiate to get closer to fair and free trade. If not then there will be a quid pro quo on nations that don’t trade freely.
Excellent column by Patrick J. Buchanan.
Thank you for posting this, Kaslin. Back in February, but as relevant as ever.
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