Reposted from The Plain Dealer
Olivera Perkins | September 7, 2012 | The Plain Dealer
CLEVELAND, Ohio — The shirt on your back. The flat-screen television in your family room. The bag of shrimp in your freezer.
Economist Peter Navarro says you don’t have to look too far to see why the United States is struggling with persistently high unemployment.
Clothing, appliances and even food at U.S. stores are increasingly imported from China.
In his book, “Death by China,” and the film by the same name opening today at the Cedar Lee Theatre in Cleveland Heights, Navarro said the trade deficit with China has shuttered more than 50,000 U.S. factories. He said Ohio was vulnerable because its historically diverse manufacturing base not only included major manufacturers, but small and mid-size companies that make up their supply chain.
“Ohio is Ground Zero in the undeclared trade war we’ve had with China since 2001,” said Navarro, a business professor at the University of California, Irvine, who will be in Cleveland this weekend.
“Ohio has been the biggest victim because it has been our strongest manufacturing state in many ways, and has not been able to withstand the onslaught,” he said.
In 2001, China joined the World Trade Organization, whose mission includes fostering formal trade agreements between countries.
“The movie is about how a Democratic president (Bill Clinton) and a Republican Congress allowed China to enter into the WTO, which was synonymous with giving China’s unlimited access to American markets,” he said. “Rather than play by the WTO rules, China began to cheat using what I refer to as Weapons of Job Destruction.”
These “weapons” include what Navarro deems are illegal subsidies from the Chinese government, including free land, subsidized energy and routine low and no-interest loans. Manufacturers also get subsidies for many exported items. Currency manipulation that allows China to undervalue the yuan is another weapon because it makes the country’s exports cheaper. He groups rampant counterfeiting, piracy and “theft” of American intellectual property as a weapon.
China’s lax enforcement of environmental and worker safety regulations give the country an unfair advantage. Lack of regulation not only harms the planet and people, but make Chinese goods cheaper because manufactures don’t have regulation compliance costs, Navarro said.
Don’t ask the WTO to do anything about these unfair advantages, he said. The body doesn’t have jurisdiction over environmental and safety enforcement. Other violations may be within the WTO’s purview, but its requirements make punishing rule breakers “really hard to enforce.”
Free trade advocates, like Bryan Riley, a senior policy analyst at the Heritage Foundation in Washington, D.C., disagree that China is to blame for the U.S. trade deficit.
“If you just look at the overall U.S. unemployment numbers after China joined the WTO, employment in the US had been growing, and continued to grow,” Riley said. “There was no sudden drop off in the U.S. because China joined.”
Navarro said unbalanced trade with China has costs 20 million U.S. jobs in a decade. He said between 1947 and 2000, U.S. Gross Domestic Product grew at an average annual rate of 3.5 percent. He said each percentage point of GDP growth produces about 1 million jobs. Since China joined the WTO, the annual growth rate has fallen to 1.6 percent, he said.
“That is about two million jobs a year not created over 10 years,” he said.
Riley said such an analysis is too simplistic, not taking such things as the impact of the global recession on manufacturing and job loss.
“I think that industries should prosper based on their ability to provide a good product at a good price, not because the government is protecting them from competition from China, Mexico or anywhere else,” he said.
Navarro said he isn’t simply blaming China for the trade deficit. He said politicians from both parties bear blame as well as “multi-national corporations that have taken our jobs off-shore.”
Harriet Applegate, who heads the North Shore AFL-CIO Federation of Labor, said unions are sponsoring Navarro’s presentation at the Cedar Lee because of concerns about off-shoring.
“The owners who moved their operations offshore are filthy rich, and the workers have lost their jobs and are working at much lower wages — if they have jobs at all,” she said.
Mary Brodzenski used to make $22.50 an hour assembling vacuum cleaners at the TTI Floor Care plant in North Canton until the plant closed in 2008, moving most jobs abroad, including China.
She transferred to another company facility making vacuum cleaner bags, but it is in the process of closing because those jobs are being shipped abroad. Brodzenski has been assigned a warehouse job with the company, making $13.40 an hour unloading vacuum cleaners made in China.
Brodzenski started at the old Hoover vacuum cleaner plant 32 years ago, expecting to work up to a decent wage and retire with an adequate pension. She said as a casualty of off-shoring, she now is only eligible for a $1,000 a month pension, which is about half of what she would have received if her job had stayed put. Brodzenski said since she’ll probably be forced to draw her pension early to make ends meet, she may end up getting less than $400 a month.
“Those corporate people are just greedy,” she said. “They look for the money. They don’t care whose lives they are destroying.”
Navarro will spend three weeks traveling Ohio as part of his “Death by China Swing State Tour.” He is trying to raise the trade deficit as a presidential campaign issue.
“The best jobs program is trade reform with China,” he said.