You can see why manufacturing did not fare well under Bush... Consider former Bush official Kevin Hassett's piece, where he said manufacturing/agriculture should just be allowed to decline, because it is the natural way of things.
The following article originally appeared on TradeReform.org.
Two former Bush Administration officials – Robert M. Kimmitt and Matthew J. Slaughter – try to rebut the massive offshoring phenomena caused by the unfairness of state-managed capitalism abroad. They don't deny that U.S. companies locate overseas or produce overseas to take advantage of currency, value added tax, and other rules… as a means to re-import into the United States.
(You can see why manufacturing did not fare well under Bush… consider former Bush official Kevin Hassett's piece I quoted yesterday, where he said manufacturing/agriculture should just be allowed to decline, because it is the natural way of things). (While we don't have the same dedication to the natural decline of manufacturing in the present administration, former Rubin-ites like Larry Summers are a substantial problem, in multiple ways.)
Kimmitt and Slaughter engage in distraction with feel good data that does not address the issue of overall effect. Their method is to create a "straw man argument" – i.e. an exaggerated argument that no one is making – and then purport to rebut it with nice but irrelevant words. It is a U.S. Chamber of Commerce lobbying piece masquerading as sober analysis.
Kimmitt/Slaughter write, in their Washington Post op-ed, this "straw man argument" allegedly used by opponents:
- Despite the common assertion that U.S. multinationals simply "export jobs" out of the United States, these firms' expansion abroad has tended to complement their U.S. operations.
No one argues that U.S. multinationals only export jobs, which is why this is a straw man argument. Obviously U.S. multinationals have some operations here, and export services/products from the U.S. as well. However, the net effect is offshoring, as the data makes clear. That offshoring is due to so-called leaders giving us a trade policy based upon a "free trade" that does not exist, and which state-managed trade rivals can take advantage of.
Kimmitt and Slaughter then paint a pretty picture because foreign multinationals provide jobs and investment here. That is true, and indeed the trade deficit causes such a gushing outflow of money, that foreign investment inflow must occur to balance that drain. Otherwise we would have zero money. Taken to the extreme, it is full foreign ownership colonization of U.S. productive assets previously owned domestically.
Here is a happy talk example:
- The good news is that some are moving in this direction. Consider Compact Power Inc., a subsidiary of South Korea's LG Chem. With more than 14,000 employees worldwide, LG Chem is one of the world's leading designers and producers of lithium-ion batteries. Last month President Obama attended the groundbreaking ceremony for its subsidiary's factory in Michigan, which will eventually employ 300 people making lithium-ion car batteries.
300 jobs. Good for those people. But 8 million lost due to overall policy effect. The U.S. developed battery technology, but who controls and is utilizing it? Others. The technology and the production is not owned by us, though we receive scraps in the form of some jobs.
We need our government to focus upon the net effect of current trade policy. We need a massive effort to rebuild America. Millions of jobs. Trillions in new investment, which should be more home grown for us to receive the greatest percentage benefit. Anecdotal examples conceal more than they reveal. Balancing trade flows, by any means possible, is the only way to solve the problem, achieve full employment, build wealth, and reclaim a long term sustainable economy.
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