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Dave Johnson

Dave Johnson

Posted: February 5, 2010 11:42 AM

Senator Shelby's "Holds" Show Need For National Industrial Policy

What's Your Reaction:

Senator Shelby is placing "holds" (filibusters) on all of the President's nominees, all by himself.

Shelby is frustrated over the Pentagon's bidding process for air-to-air refueling tankers, which could lead to the creation of jobs in Mobile, Ala.

Over at firedoglake, emptywheel writes,

The key issue is that Shelby wants the Air Force to tweak an RFP for refueling tankers so that Airbus (partnered with Northrup Grumman) would win the bid again over Boeing. ... Airbus calculated that it would not win the new bid, and started complaining.

Essentially, then, Shelby's threat is primarily about gaming this bidding process to make sure Airbus-and not Boeing-wins the contract (... this is the truly huge potential bounty for his state).

... But underlying the refueling contract is the question of whether the US military ought to spend what may amount to $100 billion over the life of the contract with a foreign company, Airbus. Particularly a company that the WTO found preliminarily to be illegally benefiting from subsidies from European governments.

$100 billion contract to build air to air tankers -- that's a lot of jobs and lots of them in Alabama.

This shows why we need a national industrial policy. The country has no policy to promote jobs and manufacturing so members of Congress are forced to do things like this to try to keep manufacturing in their district or state - competing with every other district or state. And in this case, even fighting to lose the contract for an American company!

Senator Shelby is fighting for jobs in his state, because the country is not. It is time for a coordinated national economic/industrial strategy -- just like every other country has -- so we're all working together instead of fighting over the scraps that are left behind.

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture as part of the Making It In America project. I am a Fellow with CAF.

 

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03:19 PM on 02/08/2010
Actually, Senator Shelby's "Holds" show the need for a federal government than actually works and works for America and Americans rather than the continual political squabbling we have had for a couple generations. (For prior examples of the uselessness of Senatorial squabbling, greed, and profit read some history of the Roman and Eastern Roman empires).

It has been obvious that we need a national industrial policy since at least the 1970s. Why, because the competition in Japan, etc. had such policies and, with their neo-mercantilist approach to trade, was eating our lunch. Every developed country but the U.S. has integrated and complimentary trade and industrial policies. They are doing better than we are.

What did we get? "Free Trade" ideology which ignores that there is no free trade. Loss of manufacturing and tech, which is closely related. (As the competition has moved up the tech ladder, often with tech they got from us with nothing flowing back in, they push us farther toward the edge. Not much room at the top and no manufacturing means loss of tech advantage.) Heck, lots of Americans, including Treasury, don't get that a 40% exchange rate advantage is important. Totally idiotic.

Rich Country, Strong Army - in that order.
09:42 PM on 02/08/2010
The Japanese Yen went from 360 to the dollar in 1971 all to 98 to the dollar in 1995 to 89 to the dollar last year and it has not stopped Americans appetite for Japanese goods whatsoever. The reason for the trade imbalance with Japan has little to do with the exchange rate. With China, they could revalue the yuan up by 25% tomorrow and it would only make the US trade imbalance with China larger because it would mean that US corporations have to pay more for the Chinese goods. The corporations in turn would cut expansion plans, cut workers, and increase prices on their products which would reduce the buying power of the US consumer. In time, it would bring back some manufacturing jobs to the US, but not nearly enough to justify the move in the currency. The trade problem with China is mainly structural. They produce consumer goods and ship them to the US, while the US mainly producers producer goods, raw materials and aircraft and ships them to China and elsewhere.
06:01 AM on 02/09/2010
The reason for the trade imbalance with Japan has a lot to do with the exchange rate. But that is not the only element. It is the exchange rate plus Japanese industrial policy that targets sectors, supports Japanese firms, and protects Japanese firms in the domestic market, which is used as a sanctuary base. Japan knows what companies are Japanese. The ways firms are protected has changed some over the years from high tariffs to interlocking corporate holdings, government cooperation with industries and close ties to industry associations, controlled distribution systems, standards and regulations, and on and on.

The problem with china is also not only the exchange rate. It goes far beyond that.

However, there is no reason not to eliminate this competitive disadvantage to U.S. firms producing in the U.S. Matter of fact, it has to go. Alone it is not sufficient to solve our problems but it is a necessary step.

The trade problems with both China and Japan are structural. They have created structures that encourage/force domestic production and thrown up barriers to imports and we have been open.

If you go back to the '70s when we had an edge in tech and manufacturing as well as raw materials, we should have been in surplus with Japan. The reason we were not was Japanese policy. The structure you mention was created. We have to create a new structure.
09:17 AM on 02/10/2010
"The trade problem with China is mainly structural. They produce consumer goods and ship them to the US, while the US mainly producers producer goods, raw materials and aircraft and ships them to China and elsewhere."

and this is unsustaianble - as they get better and better at producing thiose goods they develop ( or reverse engineeer - aka intellectual property theft) they no longer need the producer goods either - they will make themselves. Exporting raw materials rather than value added products is what colonies and third world countries do.

this is precisely why you do not want to offshore your capability to produce the consumer goods. Even Ricardo understood that you should not surrender your ability to make basics.

Most new technology and innovation comes from the evolution, improvement or re-application of exisiting technologies - getting rid of those basics diminish if not destroy your ability to innovate.

Aerospace is a prime example - the US is rapidly losing our tech edge in this area - when was the last time you flew in a US made plane? I travel a lot, and its in Embrears (Brazil), Canadairs (Canada) and Airbuses (Europe). Boeing outsourced significant portions of their new plane to china and other asian countries (40%) - along with this is the tech transfer. China is already caching up in auto technology - in some ways more high tech than aircraft, and are aggressively pursuing the civilian aerospace market
10:10 AM on 02/08/2010
Yes Dave as usual you are right on the money

Our total lack of coherent industrial (and coordinated trade policy - the two are inter-related) forces states and communites to compete against ourselves, rather than focus our energies competing with china, india, japan, korea and europe

there will be no real improvment in the structural problems in our economy and no meanignful job creation until we get out industrial and trade policy house in order

No other modern and prosperous nation doesn't have an industrial policy, and they have trade policy set up to benefit their domestic industries. we have no such coordination or national strategy. Unilaterl open markets are not and have not worked for the 30 plus years.

we need to be reinvesting in our manufacturing and technology capabilities. you can not have a solid economy without it - china knows this, japan konws this, india knows this, brazil knows this, germany knows this - notice how all the growing economies and those that are pulling out of recession the fastest are doing so with investing in their mfg bases, not finacial gimmicks
03:30 PM on 02/08/2010
Beyond coordinated industrial and trade policies, which we don't have, it is important to coordinate policies on foreign direct investment and technology. The U.S. doesn't even have the structure to do this. There is no Department of Industry and Trade and we have the U.S. Trade Representative's Office (USTR) as a stand alone organization for trade negotiations. Other countries trade negotiators are the same folks who support and protect their industries - that works better.

And we have a big imbalance in FDI opportunity, have had for several generations. Japanese firms, for example, can easily pursue investment here, with the help of states, but foreign firms can not freely invest in Japan in the same way. Structural barriers are barriers and have an effect.

Also, Shelby's support of foreign firms is telling. In the 80s Japan's Ministry of Trade closely watched the House and Senate and helped industry decide where to locate assembly plants for maximum political leverage. And we divided and conquered ourselves. Toyota established its "Global 15" plan in the '70s and was salivating to expand in the U.S. market - it was an absolute necessity. What did we do? Pay them well for something they wanted and needed and didn't get much in return. Good negotiating that is.
03:42 PM on 02/08/2010
Also, while politicians are certainly open to bribes and corruption in Japan, Korea, etc. They are not really for sale to foreigners as ours are. Another trade barrier, as it were.
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01:18 AM on 02/08/2010
Senator Shelby's abuse of the Senate rules not only shows the need for a national industrial policy; it shows the need for reform of the Senate. The filibuster is undemocratic in that it allows a minority of 41 to veto any legislation. But the "personal hold" letts one demagogic senator stop the nation's business. This ridiculous practice could spark a revolution if it is not eliminated. I really hope it will not be necessary to take up arms to restore democracy to the United States of America, but that is why the founding fathers put the Second Amendment in the Constitution. A visit to the Jefferson Memorial should remind anyone that the founding fathers of this country were revolutionaries.
These undemocratic rules would not survive long if every senator of either party who used them were targeted by us independents. As the recent election in Massachusetts shows, we independents hold the balance of power in most states. If we get rid of the Senators who support those rules, we should be able to reform the Senate. If we don't we will remain in gridlock. That could spark a revolution.
09:37 AM on 02/06/2010
He is too much of neocon to do the right thing.
12:06 PM on 02/05/2010
He's not "fighting" for anyone except himself and the big campaign contributions he garners from it. He has caused havoc in the government by disallowing it to be properly staffed so he could get credit for EARMARKS to his district. He is bribed, bought and greedy beyond the pale. He has sold out the USA for money for his contributors. He is a dishonest nGOPer . he complains about earmarks and bugdet defiits and yet blackmails the senate to get a kick for his owners.
His "pal McCain complains about earmarks, but not this one. No . because the party of NO will use any excuse to corrupt the process.
Shelby has sold out the USA for a few dollars from his contributors plain and simple.
Bribed, bout, corrupt, dishonest, and foremost a liar. He should resign in shame. His wife and kids should walk out on him.
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01:58 PM on 02/06/2010
Trust me, Barry, he's not alone ... and this has absolutely zero-squat to do with "GOP" or for that matter "Democrat." Both of those words are just straw-men. Windmills meant for you to joust at.

Over at opensecrets.org, you can read (and, verify) that just last year the US Congress accepted(!) more than $3 Billion in these euphemistically-called "contributions," and this is just the openly acknowledged tip of that iceberg. Divide that by about 650 Members, and toss in 9 more for the Supreme Court, and, well, "you do the math."

THERE is your problem. Your true problem.

And what stands against that? Not the Supreme Court, certainly, BUT ... yes, the Constitution itself. Thirty-one words, and pay particular attention to number twenty-five. One sentence. Article 2, Section 4. Google it.