Industrial Policy
Our country is in the hands of the Philistines. The Financial Crowd
and their economists have taken over the nation from the manufacturers that built a strong economy and wrecked it. Economists are so fixed on their clients' offshoring to China that they refrain from even mentioning offshoring, the nation's greatest loss of jobs. They are fearful that if anything is done to stop the offshoring, China will refuse to finance our budget deficits and their stimulation plan so they back a stimulation plan that creates less jobs than are lost from offshoring. Two years ago, Alan Blinder, the Princeton economist, estimated that in ten years the United States would lose thirty to forty million jobs to offshoring. That's an average of four million a year. And losing two million jobs in the last three months, Blinder's estimate is on target. The economists' plan, the Obama plan, the House plan, the Senate plan, all plans create at best four million jobs in two years, with less jobs created than are lost. Economists for years have refused to acknowledge that we're in a trade war started by Japan after World War II. Japan closed its market, subsidized and targeted its export in international trade, selling export at cost and making up the profit in its closed market. China joined in the trade war with a closed market for what it produced domestically, but opened its market for foreign production in exchange for foreign investment, research, technology and production. Of course, China controls its labor, production, and trade with its authoritarian government. Globalization is nothing more than a trade war with production looking for a country cheaper to produce. The "comparative advantage" in globalization or trade war is no longer productivity, but government. Competition in the trade war market is not company versus company but country versus country. Twenty years ago, China proved the power of economy over the military in foreign affairs when the United States had a resolution adopted in the United Nations to investigate human rights in China after Tiananmen Square. China prevailed on Zaire where it was building a railroad and other friends where it had economic ties in Africa and the Pacific Rim to delay, and there has never been a hearing on China's human rights in the U.N. China is now the superpower in the trade war in which the United States is AWOL.
We're lucky President Obama wants to be a Lincoln. The Civil War pitted those believing strongly in a market with controlled labor (slavery) against those believing in manufacture to sustain a strong democracy. Lincoln believed so strongly in democracy - of, by and for the people - that he put his people to war against his people. Today those believing in offshoring to controlled labor in China are pitted against those that realize that democracy must have a strong manufacture to sustain. President Obama will have to satisfy both, without war. His task is to develop a limited industrial policy for the United States to compete in globalization. Immediately will be the cries of "industrial policy," "picking winners and losers." The Congress will have to calm down and realize that it has already required an "industrial policy" for domestic trade, with health, safety, environmental and anti-trust requirements. The policy won't be "winners and losers" in foreign trade, but items necessary to our national security. President Obama will have almost as difficult a task as Lincoln. Economists, both conservative and liberal, will oppose anything to plug the hole of offshoring. Pitted against the President will be the financial world, the big banks, Wall Street, and Corporate America, with all of its entities, coming down on his head, such as the Trilateral Commission, the Conference Board, the World Bank, the Federal Reserve, the Business Roundtable, the National Association of Manufacturers, the National Chamber of Commerce, the Retail Federation of America, the media, etc. To confront globalization and its threat to our economy, President Obama will have to go to the people. He will have to explain that the offshoring of the nation's investment, research, technology, production and jobs - literally the economy - can't continue. The United States has been on a spending binge in the Cold War, the Vietnam War, the Bosnia War, Iraq War, Afghanistan War, Terror War and now the Trade War that has exhausted our economy. And now we have to rebuild.
The good news is that the people will be with the President. Fundamental to the American culture is "no workie, no eatie." We know that the best stimulation is a job. We know that we have to work to consume. And the American people by nature are most competitive. Long since they have frustrated at our government's failure to compete in international trade. We have been giving away the store in globalization. We have been waving the white flag of surrender in the trade war. Now the people are ready to fight - to sacrifice and rebuild our economy.
President Obama can begin by putting a tourniquet on the hemorrhage of offshoring jobs with a value added tax. Every industrialized nation has a VAT except the United States. A VAT is rebated at export, but Corporate America's taxes are not. For example, China rebates its 17% VAT when its export leaves Hong Kong. When Corporate America learns that it can't increase its profits 17% by offshoring to China, the offshoring will slow. And the economy is already experiencing the slow-down that would be caused by a VAT. It will take a year for the Internal Revenue Service and business to gear up for a VAT. In the meantime, we can start competing in globalization with a 10% surcharge on imports as President Nixon did so successfully in 1971. We can adjust the corporate tax and have room for a middle-class tax cut after the VAT takes effect. We need the money today to put government on a pay-as-you-go basis.
We have offshored our ability to defend the country. Admiral William J. Crowe, Chairman of the Joint Chiefs of Staff, warned in 1992 that we were depending too much on foreign production for our defense needs. We had to await flat-panel displays from Japan before invading Kuwait. We had to await crystals from Switzerland before invading Iraq.
Boeing can't manufacture combat aircraft without getting parts from India. Sikorsky depends on Turkey to obtain the tail motor for its helicopter. Turkey prevented our invasion of Iraq through Turkey. At the next crisis, our Commander-in-Chief could be grounded because of the want of a vital part for Marine One. In World War II, FDR had Ford produce the tanks and General Motors produce the B24 bomber. We can't depend on Germany's BMW in South Carolina or Japan's Nissan in Mississippi to produce tanks and bombers. Activating the Secretary of Commerce's list of materiel vital to the nation's security with tariffs or quotas will put America immediately back to work. This will have to be done by Congress deliberately in a measured way and with concern that an open market guarantees the best capitalism. This will be the challenge for President Obama and the Congress - to promulgate an "industrial policy" to protect our economy and standard of living in globalization.
As President Lincoln said: "As our case is new, we must think anew and act anew. We must disenthrall ourselves [from free trade economists] and then we shall save our country.
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Senator,
Thank you for this amazing piece of work.
How can we be sure Obama will help U.S. citizens who are high-tech workers will remain employed when he has put so many individuals who are beholden to corporate interests in his administration?
While IBM takes the 5th with regard to the number of U.S. citizens it has laid off http://tr.
http://tr.
Big Blue wants to help redundant U.S. employees relocate to developing markets, according to an internal document.
Please also refer to these recent reports on the subject:
A. Computerworld http://tr.
B. eWEEK http://tr.
C. eWEEK http://tr.
I strongly agree with the protection of the American auto industry for National Security reasons and I feel as strongly towards the need to add American Steel to thar protection also. We would have the ability to produce miitary vehicles if needed, but where would the steel come from in a possible time of war? It only makes sense! I red today that Sec. Clinton made the recommendation today to remove the Buy America provision after the vebal strong arming Obama took today and she of all people should realize, God forbid we have war at home, would we have time to imort the steel to build tanks?
Senator Hollings,
I agree with what you have to say about offshoring. Please use your influence to get the President to diversify the economic advisors in his administration. His admin picks, so far, have tilted toward the neoliberal side, the very culprits responsible for the errors under discussion. Why does the U.S. have to be nearly the only developed country without a sound industrial policy?
Senator Hollings,
You're absolutely right about our need to have new trade policies/ a new industrial policy. We also need new labor policies, because it doesn't make sense to go after offshoring and to turn a blind eye to the importing of labor. Democrats and liberals alike would get behind policies that protect American workers. But we need our representatives to work on legislatio
What would REALLY help is if our politicians found the personal courage to stand up and apologize to the people for selling us down the river. The simple fact is that's exactly what happened. Legislation doesn't write itself. Only you folks have the power to write legislation and vote on it.
Yes, I blame corporations, CEOs, bankers, and Wall Street for their greed and social irresponsibility. I blame economists for failing to raise red flags as they watched more and more income and wealth shift into the hands of few. The income and wealth disparities that exist today between the top 1% and everyone else have not been seen since 1929. Any economist worth their salt knows that nothing has changed for the better for the middle and lower classes during the past 30 years--- everything has got worse. But I mostly blame our politicians for letting lobbyists write all of the legislation, for pushing their agenda via lies and propaganda, for being bought off by their money, and for doing NOTHING to help working families.
It's nice to see some pols step up to call out the injustice of it all and the insanity of thinking that our economy can go on like this. But it really rings hollow when no politician has the guts to admit their own culpability. "I'm sorry, and I'm ready to work on your behalf" would go a long way to getting the people to rally behind what is both morally right and what is in the best interests of our country.
You are exactly right and millions of other Americans have (always) been very concerned about the offshoring, outsourcing, and hyper-globalisation that has ransacked our industrial and financial base and weakened our security, education, health, and finances. You've been right about so much. I remember when you called for an extension and upgrading of our rail system and a comprehensive passenger rail system, which is also a national security issue, much like the control of our borders. My first question to you Senator Hollings would be, why can't some Senators take acton to change our election process to be more inclusive and publicly funded and implemented by ordinary citizens? It must be hell to spend time around so many of your "peers". My second question is, do you believe we now require a peaceful but virulent revolution against this whole, historical corporate overclass, seize their dangerous and corrupted private insitutions and take everything that they've got, like we did the British? I mean they are killing us, why not?
Fritiz, you are a 100% right. They should listen to you. People need to save your article.
If Keynes were alive he would say that a drop in "aggregate demand" is responsible for unemployment brought on by a lack of domestic investment owing, principally, to the fact that U.S. corporations are offshoring (investing outside of the U.S.).
Offshoring, which has been going on for over 30 years under the guise of free-trade, doesn't produce an *investment multiplier* for the U.S. This is dangerous and only means more job losses will continue.
Shamefully, American companies would rather invest in China or the Philippines. President Obama has to stop the offshoring as fast as possible. America first.
"For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.
Sage advice never goes out of style. Thank you, Senator Hollings.
The only job not off shored is this guys and his buddies.
I'm so with you sir. I have a feeling events will force the hands of both parties.
I wish we had a Democratic party with the likes of you, FDR Truman, who understood the roles between Property and Labor. Sadly we don't, we have mostly bipartisan democrats and far right wing loons running the show.
If America is to survive as expected by Lincoln, then President OBAMA should and must lived up to his Secret Service name of "RENEGADE" and do what the Good Senator Hollins advocate. It is time that we have a President who look out for the interest of America, in the words of John McCain as he meant something different, however fitting for this action is "COUNTRY FIRST". President OBAMA and his administration should not fear, the people iks with him, strong labor, immigration, financial, trade and military commerce and economic laws that put America first. Our economy cannot continue to falter,...
I am sure as the President warn it is going to get worst, however it has to get worst for the people to realized that CHANGE is severely needed and this President will bring it. The CONGRESS will get behind him eventually because the regional Republican politicans will realize that they are beginning to look more foreign than American, more facist than Democratic, more pro business than pro people, pro American, pro fair trade and pro leadership. It is time to rise up, it is time for CHANGE, let is begin to move across the world!
Senator Hollings, right on target, sir!
Here's an oldie but a goodie:
"The Capitalists will sell us the rope with which we will hang them." Vladimir Ilyich Lenin
What the titans of Wall Street, Corporate America, the Banks, the MSM have managed to do with their shortsightedness is murder their own way of life. In the victory over American Labor that American Capitalists have achieved, during the last twenty nine years, their unfettered power has delivered them from being manacled in paradise to wandering, parched in the desert. Here is a short itemization of their self defeating, willful blindness:
1) Outsourcing to foreign countries with standards of living so low they could never afford the products they manufactured for export to the United States.
2) Not recognizing that the well paid American Worker was the ultimate consumer of their products that sustained their wealth.
3) That extending consumer credit was a finite process.
4)That a housing bubble, which enhanced domestic purchasing power, wouldn't collapse.
5) That fraudulent wealth can never replace actual wealth.
6) That tomorrow never comes.
The Titans of the Economy have failed, the only way forward is to leave them wandering in the desert and identifying a new way forward. I hope the President has a good compass.
Global free trade=Fair trade=Global free trade
Global free trade ≠Fair trade.
[does not=]
Global free trade [does not =] Fair trade
Computers have displaced more workers than off-shoring. I think Off-shoring is the greatest preventable loss of jobs though.
Presently the Right are rallying their people and flooding calls to kill this stimulus unless they have it their way..
They are winning as we sit idle as the majority party. We can not llow this. We need to move and rally calls of support or we will lose.
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Senators
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Computers have created lots of jobs in other countries, many of them outsourced by American companies (IBM, Microsoft, Dell, etc).
Talk about a rock and a hard place. We're in it.
Well, sir, you sure hit the nail on the head.
Few people realize too, that corporations like Walmart have contributed vastly to offshoring our wealth in exchange for shoddy. For those who don't know where the term shoddy came from; it was coined for the crappy fabric manufactured by the war profiteers in the Civil War for Union soldiers uniforms. They fell apart in the rain. So did the shoes.
I've often speculated if war profiteering started in America in the Civil War.
Obama has his work cut out for him and THAT is a fact.
Thanks for the post, Senator.
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