President Obama is talking about economic stimulus even though there is zero possibility that the Republican House will help with stimulus. They know that they gain support by blocking it and then blaming the president for slow economic growth.
Obama is not talking about unfair trade conditions or about preventing the exporting of jobs. These are urgent matters that must be addressed in the near future, but first a great deal of public education is necessary. The Republicans will not permit Obama to chalk up legislative accomplishments, so he may as well use his time to educate the public on our trade and manufacturing problems.
The extent to which jobs have been exported can be learned by googling
"Exporting America" to get CNN's long list of culprits. Be prepared to scroll down. Companies attempt to hide evidence of offshoring, and it is estimated that current data on the subject only uncovers a third of the jobs lost.
Here is a basic fact. Today manufacturing accounts for 10% of the gross domestic product. In 1979, 19.5 million Americans had manufacturing jobs. In 2009, that number was 11.5 million, and that number has not grown since then. That is due in part because our government has helped firms export manufacturing jobs and because it has done nothing to protect workers from unfair foreign competition.
The exporting of jobs and the failure of government to fight unfair trade practices has put American workers in a weak position. They are unable to bargain for safe working conditions or decent wages for fear of having their jobs exported.
President Barack Obama should make it a priority to educate voters to the harm done by unfair trade practices and by our own laws, which often reward corporations for exporting jobs. His efforts might not bear immediate fruit, but the public needs to be educated on these issues. A minority of Democrats on Capitol Hill also need to come around to defending American workers rather than voting to court corporate contributions. Some of this money comes from American sporting goods and textile firms that have their goods made abroad.
Obama would have to spend time in the industrial areas of agricultural states explaining why groups like the American Soybean Association and the American Meat Institute oppose any get tough-positions to protect American workers. They fear retaliatory tariffs and are willing to leave American workers to the tender mercies of supine trade policy.
A little more than forty years ago, Gerald Ford vetoed the Hartke Bill, which would have removed most government incentives for exporting jobs. Since, they support for giving American workers a square deal diminished and we were deluged with propaganda that we no longer needed manufacturing because almost everyone would find high-paying in an information economy. Only the deaf, dumb, and blind could entertain that notion now.
Now the nation is in deep debt to the Chinese, who have exploited our confusion about what free trade should be and have erected a very skewed, unfair playing field for American corporations. Our corporate leaders often refrain from complaining if they get some short term benefits at the cost of long term damage.
It would be wonderful if something like the Hartke Bill could be enacted, but it will take decades to build sufficient support. The best that can be done is to talk about our overall trade problems and aim at small, piecemeal changes.
Foreign countries, including China, use restrictive domestic content legislation to injure American exporters. A first step would be to copy such laws and add provisions preventing over-valuing for tax purposes foreign made parts that are to be assembled here.
A simple step would be to require on-line retailers to identify country of origins for their merchandise. It is a very small step, but it might get people thinking about trade and the disadvantages we face.
Food and Drug and other safety regulations should require packagers to identify country of origins for all major ingredients. Recently much has been reported about harmful substances that are part of drug components produced abroad and packaged here.
Product liability legislation should be amended to clearly place the full burden of product liability on American importers as well as upon the ultimate producers of harmful products. At the moment, middle men are often able to escape liability, and the law in some exporting countries completely shields their producers.
Each of these steps would save some jobs. More importantly, they could help focus public attention on the importance of bread and butter issues. Some Democrats have lost sight of them to garner contributions. Some of those who are preoccupied with cultural issues, may have some animus for the white working class which they need to overcome.
No one quite knows what makes the Republican mind work. Some Republicans seem to have a populist strain, and it is remotely possible that some of these measure would make sense to those Republicans who really are concerned about the walfare of American workers. They may not be all that numerous, but their help would still be valuable.
Another step would be to abandon the surrender policy on intellectual property laws and demand that they be fully enforced. This would include legislation that would prohibit firm that have headquarters or substantial facilities here from surrendering intellectual property in order to enter foreign markets. By giving away intellectual property, American firms are creating competition for the future. The executives who agree to these terms are thinking only about short term gains and are damaging their stockholders and country over the long term. Westinghouse, Caterpillar, Evergreen Solar, and General Electric have made serious mistakes in this area.
None of these steps involve ending tax breaks for exporting jobs, such as allowing the expensing of exporting jobs and the costs of tearing down abandoned American facilities. Doing something about these tax policies is nearly impossible in our thoroughly corrupt Congress. The over-values yuan is not addressed because the issue is just too hard for most voters to grasp. The failure of the WTO to enforce its own regulations must also be addressed some other time, perhaps a decade or so after American voters have been brought back to considering practical bread and butter issues. Once voters focus on practical matters, they may eventually see that bread and butter concerns cannot be addressed until massive political corruption is combatted.
This is the time to start talking about reviving the manufacturing sector. The Hackett Group reported that in the last eight years, the labor cost gap between the US and China had been reduced by 50%. The same thing is happening in respect to labor costs in other foreign countries. Nevertheless, a Duke survey shows that only 4% of US firms give any thought to bring jobs back to the US. That is largely due to our tax code, which rewards firms for moving jobs and headquarters abroad.
Americans have a history of ignoring the fact that free trade does not exist unless neither side cheats nor enjoys unfair advantages.
Since the time that the British started dumping goods on American markets in 1816, Americans have hesitated to respond. In part, that is because our political ideology is rooted in classical liberalism, which places a high premium on free trade. Granted, there were long periods when American protectionism damaged the economy and trade. However, there have been other times when Americans have been reluctant to protect themselves against unfair trade practices. We are living in such a period and experiencing the dire consequences of failing to look after American workers.
In recent decades, people in the rust belt were told that the exporting of jobs would not hurt them. There would be new information industry jobs and losses in wages would be counterbalanced by low prices for goods made in Asia. This sort of nonsense fueled a race to the economic bottom, and it is possible that there ill be many Detroits in what is now known as the Rust Belt.
The two great scholars who pioneered in the study of American trade, Edward Stanwood and Frank Taussig, both started out as free traders and ended up concluding that free trade was impossible until all obstacles to a level playing field are removed. Today we are paying a heavy price for the failure of our leaders to learn this lesson. It is still time to learn and act. We may be able to begin the revival of the manufacturing in this country. If Democrats address the issue, they will regain the support of many white workers who are not hung up on race and cultural questions.
For those preoccupied with race and preventing blacks and Hispanics from benefitting from government policy, very little can be done to help them see reality. They will vote cultural and racial issues long past the time when Republicans succeed in trimming Medicare, Medicaid, and Social Security. They will take comfort in knowing that Hispanics and African-Americans are suffering more than they.