Protectionism, Profits, and Pandering

Senators Obama and Clinton are competing in the Senator Edwards sweepstakes to prove who can be more hostile to free trade and critical of NAFTA - although neither has been notably critical in the past. Obama says he is going to bring jobs back to Wisconsin; Clinton is making protectionist noises to Ohio's anxious blue collar voters.

If the campaigns actually were to take foreign policy seriously rather than treat it as a pandering adjunct to domestic politics, what would be clear is that the Democrats don't have a viable international strategy to deal with economics in an age of interdependence. Why? Because they can't afford to tell the truth about our economic plight.

McCain and the Republicans have a truth of sorts: unadulterated free trade serves the interests of global business and the big corporations whom Republicans serve, so they are for it - let American workers and third world economies adjust via capitalism's notorious process of "creative destruction." Democrats respond by resorting to old-style protectionism and acting vaguely sympathetic when zealots talk about building that wall between Mexico and the United States.

Here are a half dozen truths visionary Democrats might embrace if they were not persuaded that the truth loses elections:

Truth # 1: The old manufacturing jobs aren't coming back: not ever. American labor is too expensive, the costs of safety and environmental standards too high, and the lure of cheap labor markets overseas too overpowering.

Truth # 2: Walls don't work. They not only contradict everything the open society stands for, they can't get the job done. We spent the last half century "tearing down that wall" between East and West, but now seem to think we can wall out the 12 million undocumented workers who are already here, or wall in our jobs so they won't hemorrhage to cheap labor markets where safety and environment are not concerns.

Truth # 3: The federal government has lost much of its defining sovereignty, especially when it comes to the economy. Flows of labor (the immigration crisis), capital (the north/south crisis) and goods and the plants that produce them (the job outflow crisis) are simply not subject to control by our government, and protectionism (imposing tariffs or subsidizing manufacturing) impedes market exchanges without really protecting Americans.

Truth # 4: The reality is the economy has fled the nation state box and swims freely in the anarchy of global markets, while the democratic institutions that once regulated and controlled the economy remain locked inside the nation state box. "Popular sovereignty" means that we have hitched the horse of our democracy to the cart of our sovereignty; but if the sovereign cart is broken down, the democratic horse has nothing to pull.

Truth # 5: The West and the United States underwent economic development at a huge cost in terms of child labor, unsafe conditions and environmental damage (remember Marx and Engels bemoaning the condition of the English working class?) Now we insist the developing world must pay for what we got free - rather than sharing or taking on those costs ourselves (in massive "north-south transfers of wealth").

Truth # 6: We want to let philanthropy (Bill Gates, Bill Clinton) do with charity what our democratic society and government needs to do with policy and priorities: reorder the global economy so it is subject not to our sovereignty and interests but to common democratic oversight.

So here is the real bottom line (only don't try to say it in a debate): you want change? Leadership? Vision? Then how about a new vision for democratizing globalization or globalizing democracy that puts the oversight institutions out there where the economy is -- in the global market. A new vision that recognizes that sovereignty is a dying dream but that the "free" market alternative represents a race to the bottom; a vision that refuses to limit the choice to protectionism or profits.

There is no going back, no putting the genie of global markets back inside the nation state box. But that cannot mean abdicating economics to global market anarchy or global market monopolies either. The challenge for democrats (i.e., Democrats) who care about both jobs and justice is to figure out how to maintain democracy when the "sovereignty" in "popular sovereignty" no longer has global traction.

But imagine what happens to the candidate who is truly audacious enough to say, "What stands between the United States and both prosperity and economic justice is sovereignty! We must get over our stubborn, counter-productive belief that walls, tariffs, subsidies and nationalism will do more for our interests than cooperation with others around common democratic oversight principles." This is a winning truth that can give Democrats a way around protectionism and free trade. Except it's a sure loser - all credit to the media! -- in the pandering campaign circus that currently passes for American "democracy."

Comments

[BBackSoon]

I work for a major manufacturing company. In my division we used to have some 12 plants here in the good old US of A. Sure many of them were in Right to Work states where cheep labor was exploited for profit for decades. Now most of those plants have been closed and the machinery has been moved first to Mexico and later on to China. We still show profit and our CEO got a nice chunk of change last year but wages are stagnate, healthcare costs are jumping up and there is no guarantee that we will still have jobs this time next year.

We send more and more processes off shore to India and the Philippines but we have noticed that they do work at the same levels as summer interns. We here in the states spend most of our time writing detailed project specs and instructions and then testing, troubleshooting and writing more specs and instructions to address the problems. At some point those great costs savings have to be pennies on the dollar instead of the 50% we used to hear about.

We have been sold out and until the powers that be decide that it is going to be hard to sell us Major Appliances and Shoes and all that crap at the dollar stores when we have no jobs here at home, nothing will change. I don’t believe in harsh protectionism but how about taxing US companies that manufacture most of their domestic goods overseas, at a higher rate. We should also remove some of the incentives that are in place to use Foreign Contract Labor in place of US contractors.

I am sorry but you are wrong. If we simply let business take care of business with no governmental intervention at all, companies will continue to cut all costs, reap huge profits and Board Members will get richer while the rest of us live like peasants.

Viva la Revolution.

[outnow]

The globalization process has ripped up the social contract within our borders. Now we must face some kind of international laws. The truth is that capitalism and democracy are not the same concepts. We are so conditioned to that idea for fear of being labeled as "pinkos" that many of us fail to see the plight of humanity as the population swells to 10 billion.

The issue is whether the invisible hand of the "free" market contains the wisdom necessary for the survival of the species. Collective greed is driving the future of the planet. "Enlightened self-interest" is nothing more than Ayn Rand on steroids and is absurd.

There needs to be regulation of some kind. But how much and whose version? A secret study by the Pentagon has revealed that over-population is the biggest threat to humanity as resources become more scarce and the global warming creates more economic and social unrest..

The truth of over-population and global warming in the "globalization truths" was omitted. The "sacred cow" of religion prevents us from reacting in a rational manner to the biggest threats of all. If the Pope tells the peoples of South America to "go forth and over-populate," he should first try that in Italy. We all know that they would laugh in his face, and rightly so.

Some day, we will have to confront the demons of a economic giants in China and India where the iron rice bowel is broken and globalization makes the disparities in wealth even more enormous. None of this is inevitable except for your saying that it is so.

Before you can fix it, you must name it: I'm naming it as a fraud perpetuated on humanity by the global elites. Thee nation state will survive as the foundation of Western Civilization. International law must be created for the good of humanity but some enlightened self-interest must guide policy in America.

[dadw5boys]

NO ONE IS SURPRIZED BY "TRUTH LOSES ELECTION".

TRUTH IS NOT EVEN ANY GOOD IN COURT EITHER!

[flanardiente]

....and up in Socialist Heaven, Nikita Khrushchev's laughing so hard he can't stand up.....

[PacificGatePost]

This economy places new pressures on the establishment of rules with trading partners with which there is little balance....

http://pacificgatepost.blogspot.com/2008/02/americas-china-quandary.html

Free Trade is not so free between completely disparate participants.

[northof55]

Mr. Barber,

First, this is my first time posting here. That said, your just plain full of shit. If we continue to de-industrialize the US we are going to, if we aren't now, go bankrupt. You have to manufacture and create value added to create wealth. Thats pure simple economics. A service economy is nothing more than passing printed money around. Quit shilling for the wealthy who make out because of ability to move assets.

Replying above, I don't resent a bachelors degree, I have one myself. Replying to another above that the dems don't have a policy, heres one; First, manufacturing is important for national security, Second, we must re-industrialize to create wealth in Americas heartland to pay off personal and the national debts, Third, propose a industrial policy as all other industrial nations have. Look at a chart of the loss of manufacturing jobs and US consumer debt and they shot in opposite directions staring especially from about 1995.

Further, you can directly track higher oil prices with higher unemployment in the midwest, and, higher oil prices always correlate with republican presidents. If you do your research and you see this back to 1970. This always hurts the big three and the midwest.

The bottom line is, you must manufacture to create national wealth. Look at China, Japan, and now India as the examples.

[NABNYC]

To North of 55: Welcome. And be warned: I intend to steal your wonderful line and use it often: "That said, your just plain full of shit." You just made me laugh. Good, succint, to the point. And I agree.

[unitron]

After you steal that line I suggest that you edit it to "...*you're* just plain full..."

[nativist]

Certainly this post was a satire just to rile us up!

Truth #1 Those jobs will come back if we want them. Tariff the Chinese, to wage and safety parity, along with their artificial currency, remove loopholes in the tax code. Exit the WTO. Exit NAFTA, CAFTA. Nego fair trade, not free trade. Insist on level playing field, listen to the multinats howl. Music to my ears!

Truths #2, 3, 4 Walls don't work. Even conceding that point in keeping illegals out, here's what does. Mandatory fines and jail time for employers and landlords of illegals. Removing incentives results in aliens returning home. It's time to end all work visa programs. The one thing America is not short of is willing workers. We just won't work for pennies and sweat blood for it.

You see, we're still the largest economy in the world. When America hiccups, the Global economy has a duck. If we tell the world to either play fair or play alone, (and mean it!) it will be amazing how quickly things will fall in line. It took our forefathers 200 years to get this nation to where it was until the Great Communicator, a tool of Capital and corporate lapdog, took the reins. It's only taken 25 years to return us to the Gilded Age of unrestricted capitalism, greed and a smoking ruins of a once proud nation.

I'm aware of Smoot- Hawley. You can't base all future considerations on a badly timed tariff in the thirties. The situation is completely different now. People live in bamboo huts and build computers for export. Others shovel water oxen shit, then go to work freeze wrapping farm raised salmon that glides past the FDA without so much as a cursory exam. Tell me with a straight face that that's a "level playing field" and that we should embrace this kind of trade.

Sovereignty IS important. It deserves respect and must have the upper hand over trade issues, notwithstanding the wishes of our corporate masters.

[speakeasy]

I couldn't have written this better myself if I was a multi-national CEO looking to explit slave labor and environmental degradation. What a total perversion of what trade is supposed to be about. What a defeatist attitude by the writer... The fact that we have people in power, gov't and corporate, who would sell out america to make a buck is an act of treason in my book. In case you haven't noticed, China, India and Russia have all increased their military budget, finanaced by the good ole US of A. We're such schmucks for allowing this to happen. Maybe the days of tar and feathers need a comeback!!!

Odd that nowhere in this article does he mention that the USA, as the largest consumer, could just stop buying stuff from overseas and severely impact global growth.

The writer also passively mentions the environment, which is the HUGE elephant in this china shop. Limited resources, pollution, toxic water, climate change, famine, droughts, massive weather shifts. You name it and its happening. If that sn't a serious cog in that wheel.

In the end, after this horrible experiment is over, we will find, once again, that we have been misled, but this time the stakes are much higher and death will not take a vacation...

[SubparDude]

:

"The USA could just stop buying stuff from overseas. . ."

Right. You don't need shoes, eh?

Or energy. . .

Or anything or anybody, right?

:

[Sundialsvc4]

Well, "if the cobbler's children have no shoes," and also have not the means to make them if they chose, then what sort of a cobbler is this?

If you have literally dismantled your ability to manufacture shoes (as, in fact, we have done...) then you have become the most pathetically poor country on earth, a leech upon the rest of human society that said society will not uphold. (Would you?)

If you have done all these things AND you threaten the entire globe with, in so many words, thermonuclear war ... what do you expect the rest of the world to do in response? Fight your weapons square-on like you dream? No. Leave you without shoes and socks and oil and money? Yes.

[speakeasy]

I don't recall saying anything would happen overnight, but I guess you have every right to sit there and criticize while doing nothing....

Buying energy and other commodities and resources are what trade is all about, not trading slave labor and environmental degradation. An American company sending jobs overseas to make American products to be shipped back to the US is a perversion of what free trade should be all about.

[akoop]

Democracy theorist or economic theorist? Or fronting for corporatists? This post is like listening to a wine connoiseur explaining that the reason you don't like the wine is because your palate isn't mature. Perhaps so. Then again, it just may be that the crap their selling is just that.

[Herrington]

Ok Barber, balance the approach to globalism with a combined policy of supporting the profits of domestic businesses who export with protectionist policies where American jobs, the ones that remain, are at risk. How something that reasonable would cause you to lose and election is beyond me. But anyway, given a Democratic victory sweep in November, what you propose is exactly what will happen, because unwinding the public dependence on cheap imported goods is likely to cause a great deal of short term pain to the public. The public that is already well on the road to real purchasing parity with China.

But there is more to it. Just out at the horizon is a looming conflict over resources and commodities, food and oil if you will. In the face of that, you will have to either trust the market to create a new allocation system for dwindling resources, the invisible hand, or enlist the global community to allocate resources by treaty. Either way, populations will be distressed and local politics will be motivated to secure resources for constituencies.

The natural outcome of this kind of global shortage is war, always has been The fact that global raw materials and resources are in private hands will not make a damn bit of difference to a nation on the short end of the allocation stick, whether they are ideologically free trade or not.

So, then if the U.S. has divested itself of industry, how will we fare in a global conflict over disappearing resources? Not well I should think. We need to recapture and protect key strategic industries in order to protect the freedoms of the very people who have put us at risk for their profits, protect them along with ourselves.

[LeftRight]

Okay, here's the major problem that I see with this post. There's no there there. No solution, no answers, not even a real identification of the problem. The only thing that I agree with in this whole post is that true "free trade" as supported by the republican candidates is a disaster. I don't have any solutions either, but I know that simply allowing the whole thing to become the multinationals is a worse idea than protectionism.

[taikan]

Aside from the fact that some of the "truths" listed by Barber are not true, his post is incredibly naive. In essence, he is proposing the first step toward abolishing nation states in favor of global corporations. Not only is this likely to be political suicide, but it also is impractical. The idea that China or Russia will give up any of its sovereignty to enable "cooperation with others around common democratic oversight principles," when the corporations that will benefit from doing so are primarily headquartered in the United States and the EU, is ludicrous.
Protectionism certainly can benefit some, but at the expense of others. Tariffs on motocycles with large engines is a good example. Harley-Davidson was headed for bankruptcy until those tariffs were imposed. Not only did they provide sufficient protection for H-D to enable it to rebound, saving the manufacturing jobs of H-D's workers, but those tariffs also persuaded Honda to open a plant in the United States to make their large motorcycles, thus creating additional jobs.
Protectionism, of course, is not the only way to make it more economical for companies to keep manufacturing jobs in the United States. Virtually every other country provides a significant subsidy to all manufacturers by providing universal health care, so that companies do not have to pay for the health care of their workers. Thus, while an American company has to add to its costs of production (and therefore the prices of its goods) the company's share of the cost of health insurance for its workers, companies in Europe and Asia do not have to do so.
Despite its flaws, however, there is one aspect of this post with which I agree -- the rise of global corporations poses a direct threat not only to nation states, but also to the general welfare of people everywhere.

[bmora]

Harleys are pieces of mechanical crap. Not sure if you have ever worked on one. People buy them for the ephemeral status symbol. No tangible value whatsoever. Japan is still kicking our collective butts because they make better engines, cars, motorcycles, consumer electronics etc...

[taikan]

I did not say that a Harley is a good motorcycle. Nevertheless, the fact remains that the temporary imposition of tariffs on motorcycles with large engines saved the manufacturing jobs of H-D's workers in the United States, and also caused Honda to create new manufacturing jobs here. If, as you say, "Harleys are pieces of mechanical crap," then that lends weight to the argument that tariffs which are narrowly tailored and limited in duration can save existing manufacturing jobs and/or result in the creation of new manufacturing jobs.

[austinobserver]

Agreed. To me, his post boils down to: "The multinational corporations and the wealthy elite have won and will control the world, and resistance is futile, so the Democrats should tell you losers that you better hope that by some miracle, and against all evidence and logic, the corporatists in never-befo­re-demonst­rated magnanimity will decide to cooperate with you and each other for the common good."

The ever-present free rider problem dictates that governments must exist to force economic actors to act consistently with the common good, or they will feel compelled to act in self interest that is inconsistent with the common good and we will all be worse off for it over the long term.

[3rdOption]

"we cannot get rid of the Industrial era jobs quick enough." - bmora

This is patently idiotic.

It does, however, explain perfectly how we arrived in this Free Trade Fiasco to begin with.

To Americans like the above commenter, *only losers do not have at least a Bachelor's Degree*. And since this commenter myopically believes that all Americans are like him/her, that means that all Americans must want a degree and a nice clean white collar job.

Except that *the vast majority of Americans are, and always will be, Blue Collar workers*! What do we do with them when we get rid of all of our manufacturing jobs?

Maybe all those low-lifes will just die, or work at Walmart. That would be great, wouldn't it?

This is the elitist mindset of snobbish, over-educated, under-common sensed yuppie, dare I say it, yes, "Liberals". (I think this is the first time I've used that word as an epithet.)

I genuinely hope that, as soon as possible, bmora's job is either outsourced, or filled by an H1-B immigrant.

Make sure your nametag says "bmora" so we'll all know it's you scanning our groceries at the Walmart checkout counter.

[bmora]

Fortunately, my job cannot be exported. It would seem that you harbor ill will towards people with degree(s). Unfortunately, the above post is case in point. Why do your fear learning so much.

They tuk r jua-obs!

[Aaror]

Anyone with a college degree should have taken some sort of Western History class, and should have learned what happens in a country when a large number of "Blue coller," workers are unemployed. They put on brown shirts, or grab pitchforks, or otherwise pull a Hitler/Len­in/Nepoleo­n move. Expect the same here, in 10-40 years (I hope we have at least 10 years). At that point the interesting question will be, where will you stand? For someone like me that is the ultimate question, standing between a corperate Oligopoly and a Fascist Dictatorship is an uncomfortable place for an old fashioned Jeffersonian Democrat-Republican (the original name of the party now called Democrats) like me. I doubt any Democratic movement will play a great part in such a fight, as the corpos will say they are true Democracy. Ultimately it will depend on my oaths, my consience, and the actions of both sides. But getting killed for either of those causes does not strike me as a worthwhile thing.

[bmora]

Dr. Barber, great article. I could not agree with you more. Blue collar jobs are going, going, gone. If we as a people were smart (collectively, we are not), we would start planning for the Knowledge- Based Economy (Robert Reich).

Even though I am a hardcore progressive, we cannot get rid of the Industrial era jobs quick enough. The longer we wait, the further behind we become. That is not to say that agree entirely with NAFTA.

[ImmanuelGoldstein]

The knowledge based economy is a joke. It's nothing more than a high tech version of the mythical Irish village where all the men stay drunk and all the women support their families by taking in each other's laundry. Only instead of taking in each other's bedsheets , we'll take in each other's spreadsheets.

That wonderful fable where we do the high tech knowledge jobs while we export the 'grunt' jobs to the third world? That's been refuted too. American knowledge worker's can't compete with knowledge workers that make a fraction of what they make. As it is the only career stability is in jobs that actaully have to physically be done in the United States.

[taikan]

I have a graduate degree, and I make my living based upon my knowledge and my ability to use that knowledge to benefit those who pay for my services, so I guess that makes me part of the knowledge-based economy. However, I recognize the importance of the many blue collar workers who make my (and undoubtely your) professional job possible.

If all of the blue collar jobs go away, who will build or repair our roads, bridges, mass transit systems, homes, office buildings and all the rest of our nation's infrastructure that are necessary to support a so-called knowledge-based economy? Without blue collar workers, who will manufacture and install the fiber optic cabling necessary to raise data transfer capability to something approaching that available in Japan or South Korea? For that matter, who will provide those of us in the knowledge-based economy with food, and who will deliver that food to the cities where workers who are part of the knowledge-based economy work?

[FreedomCorpse]

as an educated person, I recognize the value and importance of all jobs particularly in manufacturing. From the janitor to the operator to the designer. Once the manufacturing goes, so does all of it. The physical, real economy is the manufacture of goods. The designer, the bean counter, the manager, all depend on it....not just the grunts on the production line.

Barber does not know what he is talking about. How exactly is any global democratic body going to enforce anything? They can't even enforce the law properly in its own country. The only good thing that will come of the false globalization scheme, is that when the US goes down...so does the whole enchilada. The money people who sent all this manufacturing to these 3rd world labor camps will have to wait 50 years for it to even get close to what is being destroyed....the US.

[Sundialsvc4]

Benjamin, I do not find those "truths" of yours to be "self-evident," or even correct. In fact, I believe that they are 180-degree­s-precisel­y ... wrong.

The illusion that your viewpoint seems to embrace is that the United States can somehow afford to be "a consumer nation," unable to produce the basic products that are needed by its more than 320 million citizens even though for 200 years we did so... and were the greatest net-exporter in the world. You argue that THIS is our manifest destiny... that we must continue to "cooperate" with any other nation in the world who "sells for less, always" (ahem...) so that they can continue to suckle us as the global parasite we would have become.

Nations must produce. Not just dollar bills but real things. They must have a phalanx of both global and domestic sources. This is called "redundancy." It is also a pure national defense issue.

The Internet, for example, is a massively-redundant system. There are ten thousand ways, all different, for this byte-stream to make it to the servers of the Huffington Post, which (since you are now reading them) it obviously did. Our manufacturing base, on the other hand, is currently built on single-sources, yet supposedly "just in time," which are located ten thousand miles away. You can't build a business that way, let alone a country.

As they say, "trust, but verify." In this context, "trade, but have a second source." "Don't eat your seed-crop."

An economic system that was built on mutual strength, not mutual dependency, would in fact make more traders more true wealth than they dreamed of. If tarriffs were needed to finance a "kick start," they would not be needed for long. Trade should be entered-into because it's your most-advantageous choice, not your only choice.

[January]

Cooperation is more productive than competition? Competition generates enormous waste through duplication and reinventing the wheel? Yeah. Espousing that is the easy part, even while that sounds like blasphemy. Because we do not believe in cooperation, we don't know how to cooperate.