free trade

When Conservatives Are Right...

Dave Johnson — Fri, 12 Mar 2010 08:21:47 -0800

Pat Buchanan has a column today on manufacturing, The Disemboweling of America, that hits the nail on the head. In fact, if I fairly excerpt enough of the column and send you over to read it, my work here is done. For today.

Buchanan begins by outlining just how much our country has lost by allowing others, particularly China, to take over manufacturing.

Though Bush 41 and Bush 43 often disagreed, one issue did unite them both with Bill Clinton: protectionism.

Globalists all, they rejected any federal measure to protect America's industrial base, economic independence or the wages of U.S. workers.

. . . From 2000 to 2009, industrial production declined here for the first time since the 1930s. Gross domestic product also fell, and we actually lost jobs.

In traded goods alone, we ran up $6.2 trillion in deficits — $3.8 trillion of that in manufactured goods.

And what are the implication of this loss of manufacturing?

. . . for every dollar we send abroad for oil or gas, we send $4.20 abroad for manufactured goods. Why is a dependency on the Persian Gulf for a fraction of the oil we consume more of a danger than a huge growing dependency on China for the necessities of our national life?

... How many know that every modern nation that rose to world power did so by sheltering and nurturing its manufacturing and industrial base...

. . . No nation rose to world power on free trade. ...

Nations rise on economic nationalism; they descend on free trade.
[emphasis added]

Buchanan wrote an excellent, important column today and I encourage readers to click through and read the whole thing.

So, this "free trade" stuff has worked out for us about as well as the "free market" stuff worked out for the economy. Free market and deregulation ideology destroyed the economy. Free trade has destroyed our ability to earn money and recover from the destruction of the economy.

It is time to formulate a national industrial policy/economic strategy, impose tariffs as necessary to balance trade - especially in the case of Chinese currency manipulation - and set up taxes and penalties to stop companies from moving any more manufacturing out of the country.

Myths Of Protectionism Are Spread To Exploit Workers and the Environment

Dave Johnson — Fri, 18 Sep 2009 05:01:44 -0700

“Protectionism” is a very powerful word. In fact, simply evoking the word is capable of ending debate on any subject related to trade. Invoking the magic words, “You can’t do that, it would be protectionist,” settles all arguments.

Why, exactly, is protectionism so bad? Why can't we have fair trade that lifts workers and protects the environment instead of unregulated free trade that exploits workers and the environment? Well, after spending time looking for evidence to support the "protection is bad" arguments what I find boils down to, basically: "Because it is. Shut up."

Here is how it works, in the current discussions of how to fix the problems that led to the financial crisis there are established discussion-enders. Often the 1930s depression is invoked. For example, if you want to bail out big financial corporations and executives (and their bonuses) you say it was a “credit crunch” that caused the depression so we have to prevent another credit crunch. Booga-booga, end of discussion (even though lending is still declining even a year after the huge bailouts...) If you want to maintain low-cost import pressures to force low wages you say "protectionism caused the depression." For other arguments, you can say it was unions that caused the depression, or perhaps government regulations, or perhaps taxes. You get the picture. Booga-booga, end of discussion.

By the same magical mystique, current trade and economic discussion rules prohibit ever, ever suggesting that the depression and hence the current economic problems (because of course they are exactly the same thing, just as Vietnam was exactly like World War II) happened because of:
• extreme concentration of wealth at the top,
• monopolistic and predatory corporate practices,
• wages and compensation that are too low for regular people to participate in the economy,
• insufficient taxation of the wealthy,
• exporting manufacturing capacity,
• overconsumption,
• unsustainable practices,
• encouraging people and businesses to borrow too much,
• coziness between government and wealthy special interests,
• insufficient regulation of corporations,
• or any argument that might result in people thinking that regular people should participate fairly in the economy or have a degree of control over the government and corporate practices.

So with these rules in mind I would like to address a few of the myths about protectionism that have grown into a “conventional wisdom” that always serves the interests of the wealthiest few.

Myth: Protectionism caused the depression or made it worse. Thom Hartmann addresses this very well, so I’ll leave it to him. In 2004's, Democracy - Not "The Free Market" - Will Save America's Middle Class, Thom wrote,

When conservatives rail in the media of the dangers of "returning to Smoot Hawley, which created the Great Depression," all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.

Smoot-Hawley "protectionist" legislation did not cause the Great Depression, and while it may have had a slight short-term negative effect on the economy ("1.4 percent at most" according to many historians) its long-term effect was to bring American jobs back to America. [emphasis added]

Myth: Protectionists are “against trade,” and the similar argument protectionism is about creating barriers or just keeping out foreign goods. This is a way to short-circuit the actual arguments that trade should be fair to both sides instead of just unregulated and exploitative. Fair traders want trade to be conducted in ways that are fair and respectful of working people on both sides of the transaction. They want people to be paid fairly and their working conditions to be safe and they want the environment to be protected. When trade is conducted this way everyone benefits in the long run.

Myth: Protectionism costs jobs. This scare-tactic is used by opponents of almost every policy that benefits working people. "Raising the minimum wage costs jobs." "Taxing corporations costs jobs." Etc. Fair trade policies would increase the number of jobs because the workers making the goods that we import would be paid enough to buy the things we make here.

Myth: Protectionism ties up manufacturing resources in outdated uses. This is a valid criticism of protectionist trade policies if those policies were enacted as the result of lobbying by interests seeking to protect themselves from competition that is based on innovation and increased efficiencies. This is a key point and I want to repeat it. Fair trade advocates oppose exploitation of workers or the environment. Fair traders do not oppose fair competition, and it is important that trade regulations reflect this.

There is no question, as I pointed out earlier this week in Myths of Protectionism: Stories You Are Likely to Hear in the Wake of the China Tire Trade Tariff Case that protectionism can be misused by wealthy interests to feather their own bed in ways that harm the rest of us such as by companies that protect their franchise from fair competition. I wrote,

As with all rules they can be manipulated by the currently-powerful. This was done to keep some prices unreasonably high, encourage monopolistic practices, reduce access to localized or regionalized specialties ... So after we built up a manufacturing base the time came to start selling to others. This necessitated back-scratch trade agreements: you scratch my back by lowering your tariffs, we’ll scratch yours by lowering ours. Etc. And each country's markets expand - as does the competition.

We always have to protect against wealthy and powerful interests seizing the government's decision-making processes to further their own interests. That is just human nature. It is not an argument against the idea of having government and law, it is the reason it is necessary for us to be eternally vigilant of powerful interests and have systems and procedures in place to protect the rest of us. As with anything trade can be beneficial or harmful depending on how it is managed.

Fair traders want trade managed in ways that lift people and the environment up, increasing our standard of living and protecting the environment. Yes, we want to protect our workers and our manufacturing capacity but this is the key to prosperity and economic power. Wealthy interests are using trade as a way to pressure us to force lower wages, loss of benefits and removal of restrictions on polluting the environment.

National Association of Manufacturers Blasts … American Manufacturing?

Dave Johnson — Wed, 19 Aug 2009 12:48:11 -0700

Last week Harold Meyerson wrote a great column in the Washington Post, Just One Word: Factories, promoting American manufacturing. Meyerson wrote,

“Since 1987, manufacturing as a share of our gross domestic product has declined 30 percent. Once the world's leading net exporter, we have become the world's leading net importer. In 2007, we exported $1.2 trillion worth of goods and services but imported $1.8 trillion. If there were a debtor's prison for nations, we'd all be in the clink.

[. . .] What makes the decline of American manufacturing particularly galling is that we're not falling behind because we're inefficient: American factories are among the most productive on the planet, as McCormack notes. But alone among the world's industrial powers, we have left the task of enticing manufacturers not to the federal government but to state and local governments, which try to attract factories and research facilities with tax abatements and public investments that are dwarfed by the efforts of national governments in other lands. …
It's not just that the United States uniquely lacks an industrial policy. It's that the United States uniquely has an anti-industrial policy.”

This sounds good to me. If we are going to restore American economic power we need to promote American manufacturing.

So who comes out to blast Meyerson for his column promoting American manufacturing? Was it the European Manufacturers Association? Was it the China Manufacturers Association? Was it the Korean Manufactures Association? No, it was America’s own National Association of Manufacturers (NAM). Yes, the American NAM, not the European, Chinese, Japanese or Korean NAM, but the American NAM. They say American manufacturing is in fine shape and doesn't need any help from the government to keep it strong.

WTF?

Why is the NAM blasting Meyerson for writing a column promoting American manufacturing? A clue might be the source of the anti-American-manufacturing information they use. They quote Daniel J. Ikenson of the Cato Institute. Cato is an anti-government “libertarian” think tank that supports “free trade” and is against any kind of regulation of business, including any restrictions on imports. This could be because Cato receives a great deal of financial support from non-manufacturing interests including commodities and securities traders, tobacco companies, communications companies, software companies and oil companies. They also receive support from non-American manufacturing interests, including the Korea International Trade Association.

What I want to know is: Why is America’s National Association of Manufacturers echoing the Cato Institute’s views against American manufacturing? Has this organization lost its way? Does the NAM membership know about this?

Becerra Turns Down USTR

David Sirota — Wed, 17 Dec 2008 07:48:11 -0800

This story from Bloomberg is too bad - but let's hope Obama selects another fair-trader for the position:

Representative Xavier Becerra, a California Democrat, said he turned down an offer by President- elect Barack Obama to be U.S. Trade Representative and will stay in Congress.

In an interview with La Opinion, a Spanish-language newspaper in his hometown of Los Angeles, Becerra said that he didn’t want the job because trade was not a priority for Obama.

"My concern is how much weight this position would have had, and I reached the conclusion that it would not be a top priority, or even second or third priority," Becerra told the newspaper’s editorial board.

That last part about the priority of trade is a bit disturbing, because - as noted earlier - in order to make sure economic stimulus works, we must start reforming our trade policies. Otherwise, we're just shipping more American dollars overseas. To use a bad metaphor, if you don't plug the systemic leaks in the hull of your boat (ie. your trade policy structure), no amount of bailing water is going to keep you (ie. your economy) afloat. So, as Businessweek's cover story implies, trade has to be an integral part of the highest priority of all - economic recovery.

That said, Becerra's comment about priorities could mean that Obama passing new bilateral trade deals will not be a priority. Considering that bilateral trade deals have almost all been NAFTA-style in structure, not passing anymore of those would be progress.

UPDATE: Reuters reports that "Others seen as possible candidates for [USTR] are former Rep. Harold Ford, a Tennessee Democrat who now heads the Democratic Leadership Council." That would be truly awful - and would suggest a complete U-turn from all the policy promises on trade Obama made during the campaign.

From the Ashes of Neoliberalism

Dennis Chin — Thu, 24 Jul 2008 08:51:12 -0700

The neoliberal agenda has had devastating consequences. To change course, we will need to challenge the values of individualism and competition, and reintroduce the values of community and cooperation.

The Growing Power of the Fair Trade Uprising

David Sirota — Wed, 25 Jun 2008 13:32:19 -0700

LOUISVILLE, KY - I spent yesterday in Ohio's three biggest cities - Cleveland, Columbus and Cincinnati. With the Buckeye State among the hardest hit by lobbyist-written trade policies, it wasn't surprising that NAFTA was at the center of discussion at events for THE UPRISING in Ohio (you can listen to my Ohio NPR interview from yesterday here for a taste).

Over the last few years, polls show the public has moved to something of a consensus position on trade: full-on opposition to NAFTA-style pacts. That's for good reason as this Associated Press report shows. Tearing down tariffs and protections without regard for the consequences is not only a dangerous departure from the policies that built America's economy, but also a deliberate way to force American and foreign workers into a wage-cutting, environment-destroying, union-busting race to the bottom.

The AP story shows the destructive domino effect of NAFTA and the subsequent NAFTA-style agreements like China PNTR. When multinational corporations shift jobs to Mexico, right-wing trade fundamentalists in Washington offer up a "let them eat cake message" telling workers in Ohio that the shift at least helps impoverished workers south of the border. Then, of course, those workers in Mexico are forced to slash their own wages to compete with desperate workers in China. When the jobs inevitably shift to China, Mexico is left in shambles, and then Chinese workers are forced to slash their own wages to make sure jobs don't go to Vietnam or North Korea, where corporations are angling to employ enslaved labor.

Meanwhile, many of these trade fundamentalists like Tom Friedman and Fareed Zakaria flaunt their supposed environmentalism and humanitarianism by publicly worrying about issues like global warming and the erosion of human rights in the developing world - even though the domino effect they cheer on creates pressure on governments to reduce their pollution controls and human rights in order to retain foreign investment.

The problem, of course, is that it's hard to argue with NAFTA backers because they aren't interested in facts. It was none other than Friedman who admitted he vigorously backed a recent NAFTA-style trade deal without even bothering to read it. He, like every other reporter and commentator in Washington, calls NAFTA-style pacts "free trade" - despite the fact that they include thousands of pages of protectionist provisions for corporate profits, despite the fact that even the original architects of NAFTA have long admitted that these agreements aren't free, but instead create "managed" trade. That's the big problem - these deals are managed to enrich the elite at the expense of the rest of us.

Just like it's impossible to argue about reality with deranged religious fundamentalist terrorists, it's impossible to argue with deranged trade fundamentalists who cloak economic terrorism in the language of enlightenment. It gets to the point where Limousine Libertarians in wealthy enclaves like Boulder take to the websites of major newspapers to cite charts showing the decimation of Americans' wages as proof that NAFTA works for Americans.

Left for dead, of course, is a place like Ohio.

Wealthy pundits from New York and Washington drop into the Buckeye State every four years to berate the occasional Democratic presidential candidate who dares to question NAFTA at the quadrennial photo-op at an abandoned manufacturing plant. In the general election, those Democratic presidential candidates then inevitably hire teams of Wall Street insiders who back NAFTA as their top economic advisers, and then scurry to business publications to reassure corporate lobbyists that no, they aren't really serious about reforming our trade policy. Their Republican opponents, meanwhile, head to places like Colombia to tell the right-wing regime there that America - that purported beacon of freedom to the world's masses - will be helping murderous developing-world governments continue to brutalize workers.

But this quadrennial cycle of deception may finally be changing - and not because of the benevolence of any presidential candidate, but because the political tectonics of trade have shifted so dramatically thanks to those who are doing the unglamorous - but critical - work of leveraging real power.

Groups like Public Citizen and the Citizens Trade Campaign have ignored the Partisan War Syndrome that plagues parts of the blogosphere and the progressive left, and used this election as an instrument of the uprising - rather than seeing the election as an objective unto itself. They have, for instance, used the hard-fought Democratic primary to elicit concrete commitments on trade policy from the candidates - including nominee Barack Obama. Those efforts have been supported by a group of industrial state lawmakers, who have similarly leveraged the election as a way to force a conversation about trade into the national political debate. That conversation has been so intense it even wedged its way into the Republican presidential nomination through the candidacy of Mike Huckabee - a candidacy that won Republican primaries in some of the most conservative states based, in part, on his fair trade message.

These moves around trade suggest the emergence of true movement thinking out of the tumult of the uprising I describe in my book. This fair trade movement may continue to be ignored by the media (and, frankly, much of the blogosphere), but it represents one of the most encouraging transpartisan developments of the last few years. Out of the shadows of the crumbling factories that I have driven by here in Ohio may indeed come real change - if this movement continues to coalesce.

This is an ongoing series from the national tour for THE UPRISING. You can order The Uprising at Amazon.com or through your local independent bookstore.

Trading Away America: Time For a Trade Policy That Works for Main Street, Not Just Wall Street

Isaiah J. Poole — Fri, 20 Jun 2008 09:38:10 -0700

THE POLITICS

Today, Sen. John McCain will travel to Canada to celebrate the North American Free Trade Agreement and pledge to pursue more of the same corporate trade agreements. He will criticize Sen. Barack Obama for calling for renegotiating NAFTA and similar agreements. This echoes the position of President Bush and most Republicans in Congress.

Americans, however, overwhelmingly believe that current trade policies have "subjected American companies and employees to unfair competition and cheap labor" [Rasmussen Reports; NBC News/Wall Street Journal Poll]. They are looking for a different course. This is a golden opportunity for progressives to speak out against the unfair trade policies of Bush, McCain and their congressional enablers, and to lay out a progressive trade strategy that works for working people.

THE FACTS

America has lost millions of jobs due to trade policies designed for multinationals, not for the nation. Every year, about 400,000 American jobs are lost because of our foreign trade policy—and that number takes into account employment created by increased exports [Dean Baker, The American Prospect; Associated Press]. The manufacturing sector has been hit the hardest, with 3.4 million jobs—one out of every five manufacturing jobs—shipped overseas over the past seven years. Under current policies, as many as 40 million more jobs will be at risk over the next 10 to 20 years [Associated Press].

America's trade deficit has nearly doubled during the Bush presidency. Last year's trade deficit was $711 billion compared to $365 billion in 2001 [U.S. Census Bureau]. In 2007, the trade deficit with China alone hit a record $256 billion [U.S. Census Bureau]. Almost half of our trade deficit—$327 billion—is attributable to oil imports [Petroleum Intelligence Weekly]. To finance this debt, we must either borrow from countries like China or sell off American assets at the rate of $2 billion every single day.

The American economy is increasingly in hock to foreign governments. Led by Japan, China, the United Kingdom and the oil exporting nations of OPEC, foreign governments now own more than $2 trillion in American debt. China and the OPEC nations are setting up sovereign investment funds to buy up pieces of America. China recently bought a $5 billion stake in Morgan Stanley. Abu Dhabi bought $7.5 billion of Citigroup. Singapore paid $4.4 billion for a part of Merrill Lynch [The New York Times].

American consumers are at risk from toxic imports. Just last year: 20 million toys from China were recalled, including more than 1.5 million toys covered with lead paint; 450,000 unsafe tires were recalled; four brands of toothpaste were recalled because of a toxic ingredient; and 5,300 product lines of pet food were recalled because they contained deadly chemicals that killed more than 4,000 pets [USA Today].

THE ARGUMENT

The current Wall Street trade policy has undermined our economic security. These trade deficits cannot be sustained. Those who call for more of the same have to explain how they plan to get us out of the hole we are in. Platitudes about level playing fields aren't enough anymore. We need a new national strategy to sustain America's middle class in a global economy. Without a new strategy, we simply cannot compete successfully against foreign businesses that pay their workers less than one dollar an hour [U.S. Bureau of Labor Statistics].

More of the same will only continue to benefit multinational corporations at the expense of working families. The current global economic strategy was designed by and for the multinational corporations and banks-a strategy for Wall Street, not for Main Street. Our laws and trade agreements encourage companies to ship our inventions, technologies and jobs abroad where they can take advantage of minimal safety, environmental and labor standards. That needs to change.

It isn't about free trade or protectionism. It's about whether our trade strategy is designed to benefit global corporataions or to help secure a broad middle class. As Barack Obama points out, "allowing subsidized and unfairly traded products to flood our markets is not free trade." Opening our markets to countries like China and Japan that manipulate their currencies and control access to their own markets is not free trade. America's trade deficits have driven down the value of the dollar in Europe, so our exports are rising there. But our deficits with China are still rising, because the Chinese policy is to control the value of its currency to sustain its export-led growth strategy. Thus, "free trade" doesn't work. The only way to achieve a relative trade balance is by adopting an aggressive national strategy.

PROGRESSIVE SOLUTIONS

No more flawed trade agreements like NAFTA. When you're in a hole, stop digging. It's time to stop approving trade agreements modeled after NAFTA. It's time to renegotiate our current trade agreements so that they work for American workers.

Move to energy independence and capture the green markets of the future. The cost of imported oil now amounts to about half our trade deficit. We need to launch a concerted drive for energy independence, investing in conversation and renewable energy, developing the new machines and appliances of the future. We will create jobs now, reduce our trade deficits, limit the transfer of wealth to often hostile oil producing nations, and capture the lead in the green industries that must grow in the future.

Invest in America. In order to restore our position as the best country in the world for both business and labor, we need to invest in ourselves. That means fixing our nation's bridges and roads, expanding mass transit and broadband access, becoming energy independent, developing new "green" technologies. It means major efforts to provide every child with high quality education, and every worker with the opportunity for advanced training. To sustain a high wage policy, we need to insure that our country is the most efficient, and our workers the best educated.

Champion new global rules that lift standards up, not drive them down. We need rules that help raise up safety, environmental, and labor standards abroad, rather than driving them down here. In addition, we need to pressure the World Trade Organization to enforce existing rules against export subsidies and import barriers that foreign governments use against the U.S. And we must repeal federal laws that give tax breaks to multinational corporations that move jobs abroad.

LINKS

For Robert Borosage's article about a progressive strategy for global trade, click here.

For Damon Silvers' article in The American Prospect on how to turn around the economy, click here.

For more progressive trade policy, click here.

To subscribe to future CAF Making Sense 2008 talking points, click here.

June 20, 2008

Toward A New Washington Consensus

David Sirota — Fri, 16 May 2008 09:08:06 -0700

Join the book club for David Sirota's upcoming book, The Uprising, due out on 5/27.

For all the talk from "free trade"-backing politicians about needing to engage the world, most of them understand almost nothing about how the world sees our international economic policies. As I show in my new newspaper column this week, our so-called Washington Consensus policies on globalization are stirring a backlash in both the industrialized and developing worlds.

To report this column, I conducted exclusive interviews with two foreign leaders - Jack Layton, head of Canada's New Democratic Party, and Otton Solis, the Costa Rican economist who formed a new political party in his country that almost won the presidency. Both of them expressed deep concerns about NAFTA-style trade deals - not only because those deals empower corporations to overturn laws passed by democratically elected governments, but because they aren't "free" in any sense of the word - they include all sorts of protectionist provisions for corporate profits. And as the column shows, their sentiment is backed up by public opinion in their parts of the world.

This is all very relevant because - if you hadn't noticed - a heated debate over trade and globalization policies is currently occurring in American politics. As Democrats sharpen their fair trade talk and promises, people like John McCain are making wild accusations claiming that such moves will alienate the rest of the world - when in fact the actual public opinion data shows precisely the opposite. Far from quelling anti-Americanism and building diplomatic bridges, our current trade policies exacerbate anti-Americanism and burn what few diplomatic bridges we have left.

This isn't to say that the rest of the world is "anti-trade." That's the tired, cartoonish phrase that the "free" trade extremists use to describe anyone who wants a new trade policy (and I put "free" in quotes because, as Solis notes in my column, "free" trade deals are protectionist - they are just protectionist for corporations). Progressives here and abroad are all for trade and commerce - they just want the rules of trade to protect people and the environment, before they protect corporate bottom lines.

The problem, of course, is that the debate over globalization has left the "reality-based" world. While reformers are arguing with actual facts, figures and history, the Establishment argues with empty rhetoric that actually thumbs its nose at facts. Remember, it was none other than Tom Friedman - America's leading cheerleader for status quo trade policies - who actually went on national television and bragged that "I wrote a column supporting CAFTA. I didn't even know what was in it. I just knew two words: free trade." That's right - in the face of growing global animosity to America's trade policy, our country's leading Republican displays no understanding of trade policy, and our country's leading "intellectual" thinker on trade trumpets the fact that he advocates for trade deals that he doesn't even bother to read.

You can read the whole column at the San Francisco Chronicle, Denver Post, Ft. Collins Coloradoan, In These Times, TruthDig, Credo Action, or Creators. The column relies on grassroots support, so if you'd like to see my column regularly in your local paper, use this directory to find the contact info for your local editorial page editors. Get get in touch with them and point them to my Creators Syndicate site. Thanks, as always, for your ongoing readership and help contacting local editors. This column couldn't be what it is without your help.

Manufacturing a Food Crisis

Brian Dockstader — Thu, 15 May 2008 12:08:29 -0700

How "free trade" is destroying Third World agriculture--and who's fighting back.

NAFTA-Type Deals Sour Public on Free Trade

Isaiah J. Poole — Mon, 05 May 2008 18:57:51 -0700

Forty-eight percent of the people responding to an April 2008 Pew Research Center poll said that free trade agreements are a bad thing for the country, compared with 35 percent who call them a good thing. In that same poll, 61 percent of respondents said that free trade causes job losses, 56 percent said it lowers wages and 50 percent said it slows the economy.