Reposted from the Huffington Post
*****
As Jobs Go Global, U.S. Workers Pay
Ian Fletcher | February 3, 2012 | Huffington Post
It’s no secret the pot is boiling a bit again with respect to America’s trade-induced economic problems. Or, more properly, free-trade induced, as neither I nor any other protectionist I know is against trade per se. Or, to be even more precise, “free”-trade induced, because free trade isn’t really free on the part of foreign nations, which block American exports by a thousand devices overt and covert.
The New York Times has an o-kay story on the problem here: As Jobs Go Global, U.S. Workers Pay.
Glad the NYT is running this, and glad Reuters wrote it.
But it’s mild, mild stuff. In terms of my book Free Trade Doesn’t Work, they’ve admitted to Chapter 5′s dubious assumptions #3 (domestic factor mobility) and #4: (inequality). No mention of the other 7. I summarized these issues in an article here.
So they’re really trying to preserve the conventional “free trade is, all things considered, best” model, by showing how observed problems do not refute that model but can be explained within it. As I noted in my book, none of my “7 deadly sins” are exotic stuff; they’re all actually well-cataloged within conventional economics, if one knows where to look.
Expect more of this: the conventional wisdom is designed for defense in depth. The establishment’s strategy is to make the smallest possible concession in the face of every new fact.
I wrote about the MIT “China Syndrome” report the article mentions when it came out, here:
The Third Way think tank has a new report out on dealing with China, “China’s Trade Barrier Playbook: Why America Needs a New Game Plan,” here.
Third Way styles itself, more or less, as a post-partisan “fresh thinking” good-government group. I’m not a huge fan, as they tend towards repackaging establishment-pleasing solutions in “new” garb, but they’re sometimes worth reading.
Their report grasps the scale and nastiness of China’s trade barriers against the U.S. But I can’t take seriously any would-be trade reformer who supports the Trans-Pacific Partnership, which I debunked here.
Also, the report has some tediously naive stuff about how China supposedly doesn’t know what’s best for it (and how we can teach them!), to wit:
The United States should redouble its efforts to convince China’s government, business and thought leaders that playing by the rules is ultimately in China’s own interest. America might note, for example, that:• Increasing the value of the Yuan will help China control serious inflation,
increase domestic consumption and benefit China’s consumers.
• Protecting IP is critical if China is to develop its own new ideas and build a
real innovation-based economy.• Fair, international technical standards will help Chinese companies sell
innovative products in foreign markets.• Assuring fairness for U.S. investors will win China allies as it seeks to
increase its own investment in the United States.
Like China’s going to take trade pointers from the side that’s currently losing!
Liberal/”progressives” get a tingle down their leg when someone denounces “free trade.” Since they are totalitarians at heart, it is the word free that gives them heartburn.
Paul Craig Roberts, in his 2010 book, “How The Economy Was Lost,” had this to say about free trade:
“The offshoring of American jobs is the antithesis of free trade. Free trade is based on comparative advantage. Jobs offshoring is an activity in pursuit of the lowest factor cost – an activity that David Ricardo, the originator of the free trade theory, described as the betrayal of one’s own country . . .” p.155
The liberal/”progressives” have been blaming David Ricardo for the loss of our manufacturing jobs to China. This is based partly on a misreading of Ricardo and partly on a willful misinterpretation of what he said.
Back in the eighties, liberal/”progressives” were blaming the fact that Japan was taking our jobs on the “lingering influence” of Henry Ford and Frederick Winslow Taylor. They insisted that we abandon the “outmoded ideas” of Ford and Taylor and adopt, wholesale, the “fresh ideas” of their heroes – Maslow and Herzberg.
Meanwhile, back in Japan, they were religiously following the teachings of . . . Ford and Taylor. The Japanese were smart enough to recognize and to adopt the common sense wisdom that had been proven to work instead of the snake oil that was more popular with leftist professors.
We have allowed ourselves to be mesmerized by the term “free trade”. How could the land of the free be against free trade? I suggest that we use the phrase “trade rape” in the future. Similarly, if we are going to constantly refer to the icon of “free enterprise”, we should resurrect the term “free labor” which would include freedom to change jobs without being held back by underwater mortgages or health insurance and freedom to organize.
I am convinced that tariff-free trade between countries having order-of-magnitude income disparity is destructive to wage-based demand in the higher wage country as well as global demand. It also blocks labor in the higher wage country from transitioning to a shorter work week in order to sustain employment and demand in the face of rapid automation.
The restoration of our 30% tariff which existed from the formation of our country until WWII, is the key gating factor to the reversal of our failing middle class and the renewal of global demand growth. It is not protectionism but the key action needed to restore global growth.
Dr Bob Goldschmidt,
You are again perfectly correct on this issue. We should call “free trade” as it is practiced today as “Trade rape” and that much “free enterprise” is “free labor”. Everything today seems to be packaged in the package that best serves the seller. We need to continually ask ourselves what the truth is behind the words and come up with a more accurate vocabulary than the one that is designed by the special interests pushing this stuff for their own benefit.
Tom
Free trade is the current beneficially of a highly effective propaganda campaign. Because the term “Free trade” is a Glittering Generality, a propagandist’s device that uses value-based vague words to invoke powerful emotions, during the last decade the U.S. was no closer to enjoy free trade as maintaining secure borders. When both Donald Trump and Michael Moore, from opposite ends of the political landscape can avoid being blinded by this Glittering Generality why can’t The Obama Administration and the House leaders? Perhaps they have been busy dining on too many free-lunches.
Fair trade and Newt Gingrich’s honest trade are also Glittering Generalities versus balanced trade which is a concrete term, if not achieved, there will be no denying.
Excellent post, Hugh
My degree is in Electronics Engineering Technology, I graduated in the mid 1970s. We were fully aware of the widespread benefits of NASA’s R&D. Virtually every aspect of the technology we all enjoy today is directly derived from the work of NASA and the DOD and they stood on the backs of 160 years of US government backed technology projects. This is the difference between a dying nation and a thriving one. So B. Obama shuts down NASA and all of the education, science, private industry and jobs that created. I watched the USA land on the moon on live TV, while a teenager.
1970 Americans had a lot going for them, including tariffs [getting progressively lower] and quotas on imports, but “free trade” was already beginning to erode US manufacturing.
Here is a video that addresses your open borders comment, in a somewhat more specific way:
http://www.nbcdfw.com/news/tech/Obama-Asks-for-Fort-Worth-Engineers-Resume-138445254.html
U.S.-BORN INDIVIDUALS WITH ENGINEERING DEGREES (under age 66)
(based on most recent American Community Survey by the Obama Administration
itself)
101,000 — U.S. engineers looking for a job who can’t find any work at all
244,000 — U.S. engineers who have dropped completely out of the labor market
1,470,000 — U.S. engineers who are working but no longer as engineers
========================================================
1.8 million — Total U.S.-born individuals under the age of 66 who have engineering degrees but don’t have an engineering job.
There is a lot to say about all those numbers. But one thing that can’t be said is that the United States doesn’t “have enough highly skilled engineers” among
its own citizens.
These numbers were compiled by Pres. Obama’s own staff. But he apparently never thought to check on the facts. He was perfectly willing — just like most Republican leaders — to simply take the word of the business elites with whom he hobnobs when they claim they have to have more foreign engineers.
If this outrages you, go to your NumbersUSA Action Board and find the free actions you can take.
Trade will continue to be distorted as long as the world continues to have unsound money. Real wages have declined worldwide the UN has reported in previous economic reports. It’s not a surprise when you have countries that manipulate their currency by printing new money out of thin air faster then a trade competitor which makes labor costs in paper money artificially cheaper. Countries that undervalue their exchange rates prevent workers from buying the products they make. And countries that lose capital due to currency manipulation and industrial polices find their wages have declined and then have to depend on credit created out of thin air to buy the products they used to make. So as a result real wages have declined in both countries that make and consume the goods due to inflation.
The theory of free trade it has to be remembered assumed that it would be benefical to trade freely unique goods like coffee for oranges for example and assumed the world had sound money which meant every country defined their currency as a certain weight of gold and silver. Under a world sound monetary system, if capital was outsourced to a country that had a higher ratio of labor to capital which meant to a country with lower wages; the offshoring of capital could not continue for long like today because as capital was offshored real wages and the currency value of the country where capital was outsourced to would rise thus causing imports to become eventually more expensive and would then make exports from the country that was running a trade deficit become more competitive. Today there is no adjustmet because countries can just keep inflating faster to make their goods priced in dollars cheaper.
Chrystia Freeland, the author of the NY Times article, smugly dismisses the upheaval that American workers face from these trade giveaways as “painful indeed.” This is typical of the intelligentsia who advocate on behalf of globalism and its diminishment of the majority of Americans. I wish I were in charge long enough to give them the good purging they deserve, as it would be nice if they could personally feel some of the pain they are so willing to inflict upon the rest of us.
The fact is however, globalism is no more than a few lines of type in the Federal Register – And with the mere stroke of a pen, a great deal of damage could be undone. Globalism is not inevitable, it is not natural law. It has never lived up to the promises that were made to Americans on it’s behalf, and the average American is now understanding this.
Chrystia Freeland’s last five paragraphs are empty, narcissistic, words on behalf of an utterly discredited ideology. The wheels are coming off the establishment’s free trade wagon and it’s heading over a cliff. It’s going to be fun to watch!
Again and again, the following quotes speak volumes regarding those authoring trade deficit and globalization articles/op-eds appearing NYT and the WSJ:
“A man is incapable of comprehending any argument that interferes with his revenue.” – Descarte
“The mind is like a parachute – it works only when it is open.” – Longfellow