Washington Times Against Protectionism Before They Were For It

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.
President Obama is visiting Asia, and is blasted over and over about America’s supposedly “protectionist” policies.

“China on Monday accused the United States of increasing protectionism…”

Think about it, the country with the massive trade surplus accuses the country with the massive trade deficit of being “protectionist.” Call it The Audacity Of Projection.
Our trade opponents have learned that all they have to do is shout the word “protectionist” and their American enablers will quickly run from doing anything that might help American companies and workers. But what happens later, when the consequences start hitting home? Do the “free trade” shouting, foreign-competition enablers take the blame and accept responsibility when Amercan dollars are spent overseas and American workers lose jobs and American factories close? Who could have known that they would point the finger at the President instead of themselves?
Here is what I am talking about:
On February 8, 2009, during the debate over the stimulus package, the conservative Washington Times joined the “free trade” chorus, denouncing the package’s proposed “Buy American” requirements as the same kind of “protectionism” that conservative mythology says caused the Great Depression: EDITORIAL: How to cause a depression,

…Tucked within the economic stimulus bill the House passed last week was a clause requiring state and local public works agencies to buy American iron and steel for their reconstruction projects, and the Senate expanded it to all manufactured goods.
[. . .] The stimulus bill has a way to go before it reaches Mr. Obama’s desk, but if strong “buy American” mandates are present at that time, he will have no choice but to veto the bill. Otherwise, he will be forever known as Barack H. (Hoover or Hawley) Obama.

Conservative free-traders got what they demanded. In response to these and other cries of “protectionism!” the Senate backed away from the Buy American clause, changing it to vague language requiring that the money be spent in ways consistent with existing treaties.
Since this wording gives the President some discretion in how the money is spent conservatives started demanding the President spend it … outside of the country. For example, a Washington Times editorial on March 24, EDITORIAL: The Mexican-American War of 2009, ended by blasting President Obama for wanting American stimulus dollars to stimulate America’s economy:

“Wasn’t Mr. Obama going to be the “international” president who was going to get the rest of the world to love us? The path to improving relations does not involve destroying jobs in other countries as well as in our own.”

So now it turns out that many stimulus dollars are being spent according to the wishes of the “free trade” conservatives, with money to purchase wind turbines creating jobs in Europe and China, and who could have known, the very same free-trade conservatives are JUST OUTRAGED that President Obama is sending American stimulus dollars out of the country! For example, a Washington Times editorial on November 13, EDITORIAL: Stimulus creates jobs in China, begins,

Of the $1 billion in clean-energy stimulus money spent since the beginning of September, $850 million has gone to foreign wind companies. It doesn’t take a bunch of experts at a hastily planned “jobs summit” to discover this isn’t the way to bolster employment in America.
Indeed, the 11 U.S. wind farms that received stimulus money from the Treasury have imported 695 of the 982 wind turbines to be installed, creating 4,500 jobs overseas. That’s far more overseas work than the stimulus money has created in the United States.

Yes, how DARE they not require that American stimulus dollars be spent in America! This from the very same Washington Times editors who earlier in the year demanded exactly that.
Who could have known that conservatives would attack President Obama for the consequences of giving in to conservative demands??!! The Washington Times was against protectionism before they were for it. Call it The Audacity Of Hypocrisy.
The lesson to be learned here is to stop listening to these conservative, “free trade” clowns. They are only interested in making the rich richer at the expense of the rest of us and will say whatever advances that goal. We should start just doing what is right for the country, our workers, our factories, our companies and our jobs.

Myths Of Protectionism Are Spread To Exploit Workers and the Environment

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.
“Protectionism” is a very powerful word. In fact, simply evoking the word is capable of ending debate on any subject related to trade. Invoking the magic words, “You can’t do that, it would be protectionist,” settles all arguments.
Why, exactly, is protectionism so bad? Why can’t we have fair trade that lifts workers and protects the environment instead of unregulated free trade that exploits workers and the environment? Well, after spending time looking for evidence to support the “protection is bad” arguments what I find boils down to, basically: “Because it is. Shut up.”
Here is how it works, in the current discussions of how to fix the problems that led to the financial crisis there are established discussion-enders. Often the 1930s depression is invoked. For example, if you want to bail out big financial corporations and executives (and their bonuses) you say it was a “credit crunch” that caused the depression so we have to prevent another credit crunch. Booga-booga, end of discussion (even though lending is still declining even a year after the huge bailouts…) If you want to maintain low-cost import pressures to force low wages you say “protectionism caused the depression.” For other arguments, you can say it was unions that caused the depression, or perhaps government regulations, or perhaps taxes. You get the picture. Booga-booga, end of discussion.
By the same magical mystique, current trade and economic discussion rules prohibit ever, ever suggesting that the depression and hence the current economic problems (because of course they are exactly the same thing, just as Vietnam was exactly like World War II) happened because of:
• extreme concentration of wealth at the top,
• monopolistic and predatory corporate practices,
• wages and compensation that are too low for regular people to participate in the economy,
• insufficient taxation of the wealthy,
• exporting manufacturing capacity,
• overconsumption,
• unsustainable practices,
• encouraging people and businesses to borrow too much,
• coziness between government and wealthy special interests,
• insufficient regulation of corporations,
or any argument that might result in people thinking that regular people should participate fairly in the economy or have a degree of control over the government and corporate practices.
So with these rules in mind I would like to address a few of the myths about protectionism that have grown into a “conventional wisdom” that always serves the interests of the wealthiest few.
Myth: Protectionism caused the depression or made it worse. Thom Hartmann addresses this very well, so I’ll leave it to him. In 2004’s, Democracy – Not “The Free Market” – Will Save America’s Middle Class, Thom wrote,

When conservatives rail in the media of the dangers of “returning to Smoot Hawley, which created the Great Depression,” all they do is reveal their ignorance of economics and history. The Smoot-Hawley tariff legislation, which increased taxes on some imported goods by a third to two-thirds to protect American industries, was signed into law on June 17, 1930, well into the Great Depression. In the following two years, international trade dropped from 6 percent of GNP to roughly 2 percent of GNP (between 1930 and 1932), but most of that was the result of the depression going worldwide, not Smoot-Hawley. The main result of Smoot-Hawley was that American businesses now had strong financial incentives to do business with other American companies, rather than bring in products made with cheaper foreign labor: Americans started trading with other Americans.
Smoot-Hawley “protectionist” legislation did not cause the Great Depression, and while it may have had a slight short-term negative effect on the economy (“1.4 percent at most” according to many historians) its long-term effect was to bring American jobs back to America. [emphasis added]

Myth: Protectionists are “against trade,” and the similar argument protectionism is about creating barriers or just keeping out foreign goods. This is a way to short-circuit the actual arguments that trade should be fair to both sides instead of just unregulated and exploitative. Fair traders want trade to be conducted in ways that are fair and respectful of working people on both sides of the transaction. They want people to be paid fairly and their working conditions to be safe and they want the environment to be protected. When trade is conducted this way everyone benefits in the long run.
Myth: Protectionism costs jobs. This scare-tactic is used by opponents of almost every policy that benefits working people. “Raising the minimum wage costs jobs.” “Taxing corporations costs jobs.” Etc. Fair trade policies would increase the number of jobs because the workers making the goods that we import would be paid enough to buy the things we make here.
Myth: Protectionism ties up manufacturing resources in outdated uses. This is a valid criticism of protectionist trade policies if those policies were enacted as the result of lobbying by interests seeking to protect themselves from competition that is based on innovation and increased efficiencies. This is a key point and I want to repeat it. Fair trade advocates oppose exploitation of workers or the environment. Fair traders do not oppose fair competition, and it is important that trade regulations reflect this.
There is no question, as I pointed out earlier this week in Myths of Protectionism: Stories You Are Likely to Hear in the Wake of the China Tire Trade Tariff Case that protectionism can be misused by wealthy interests to feather their own bed in ways that harm the rest of us such as by companies that protect their franchise from fair competition. I wrote,

As with all rules they can be manipulated by the currently-powerful. This was done to keep some prices unreasonably high, encourage monopolistic practices, reduce access to localized or regionalized specialties … So after we built up a manufacturing base the time came to start selling to others. This necessitated back-scratch trade agreements: you scratch my back by lowering your tariffs, we’ll scratch yours by lowering ours. Etc. And each country’s markets expand – as does the competition.

We always have to protect against wealthy and powerful interests seizing the government’s decision-making processes to further their own interests. That is just human nature. It is not an argument against the idea of having government and law, it is the reason it is necessary for us to be eternally vigilant of powerful interests and have systems and procedures in place to protect the rest of us. As with anything trade can be beneficial or harmful depending on how it is managed.
Fair traders want trade managed in ways that lift people and the environment up, increasing our standard of living and protecting the environment. Yes, we want to protect our workers and our manufacturing capacity but this is the key to prosperity and economic power. Wealthy interests are using trade as a way to pressure us to force lower wages, loss of benefits and removal of restrictions on polluting the environment.

Myths of Protectionism: Stories You Are Likely to Hear in the Wake of the China Tire Trade Tariff Case

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.
President Obama has decided to enforce our trade laws and imposed a 3-year tariff on Chinese tires. I suspect the country is about to witness a corporate hissy fit that will surely rival any righteous teabagger’s demands to see the President’s birth certificate.
Here is what is going on: when the US endorsed China entering the World Trade Organization the agreement was that if any of our industries were significantly disrupted, we could call “time out” and give those industries 3 years to adjust. In case after case President Bush refused to enforce this agreement as China took over one industry after another. Since we then had to buy what we used to make, our balance of trade deteriorated and we now owe China vast sums.
In this case the U.S. International Trade Commission found that America’s tire industry was, to say the least, disrupted by a surge of imports of cheap tires. As with so many industries, cheap Chinese imports quickly dominated the market, American factories closed, American workers were laid off, American communities were devastated and instead of having to pay wages and maintain factories, American CEOs and Wall Street executives pocketed more and more short-term profits at the long-term expense of their own companies and our country’s economy.
So this time President Obama is enforcing the agreement and applying tariffs. In fact he is applying a lower tariff than the 55% that was recommended, but the tariff of 35% is still substantial and may save jobs, preserve some manufacturing capacity, and hold the trade deficit down just a bit.
The corporate hissy fit is beginning right on schedule. The word being shouted loudest is “protectionism” and there are threats that this will lead to a trade war.
The headline at the Drudge Report screams: “CLASH OF THE TIRES LEADS TO TRADE WAR,” linking to a Financial Times story that doesn’t actually say anything about a “trade war.” In the story China’s minister of commerce Chen Deming says, “This is a grave act of trade protectionism,” and Eswar Prasad, professor of trade economics at Cornell University, calls the enforcement of the agreement “protectionist measures” while at the same time saying the tariffs are not “substantive restraints on trade.”
The Washington Post, rather than lead with the pro-American viewpoint, chose to lead with China’s, “China blasts US tire duties as protectionist blow.” Many other corporate-dominated media outlets followed in a similar vein, arguing how this is a bad decision. Wall Street Journal, “A Protectionist Wave” and “Tariff on Tires to Cost Consumers”. Others, like Business Week, just reported the news: “In China Tires Case, Obama Strikes Middle Ground.” (Forbes, to its credit, led with a neutral pun, “China and US: Tire-d of Fighting.”)
So what is “protectionism” and why is it supposed to be wrong for a government to protect a country’s manufacturing interests? Isn’t America borrowing so much money from other countries because we don’t manufacture enough goods here anymore to sell and thereby pay for the things we buy?
In the past a major portion of America’s tax revenue came from collecting tariffs on imported goods. This helped fund development of our competitive infrastructure while maintaining internal markets that encouraged development of industry to make goods here both for use in the country and for export. This led to manufacturing jobs. Every country that has built up a manufacturing base has done so by restricting competitive imports.
But there were problems with this “mercantalistic” approach. As with all rules they can be manipulated by the currently-powerful. This was done to keep some prices unreasonably high, encourage monopolistic practices, reduce access to localized or regionalized specialties and discourage others from importing our domestically-made goods. So after we built up a manufacturing base the time came to start selling to others. This necessitated back-scratch trade agreements: you scratch my back by lowering your tariffs, we’ll scratch yours by lowering ours. Etc. And each country’s markets expand – as does the competition.
Unfair competition led to the idea of protecting our standard of living. Unfair labor costs, kept low by use of child or prison labor, exploitive wages in non-democratic countries, even use of forced labor or slaves undercuts our own companies’ ability to compete. Failing to provide worker safety protections, or allowing pollution also provide trade advantages to offshore competitors. So to protect ourselves we imposed tariffs that raised the store price on those goods to prevent them from undermining our own standard of living and safety and pollution standards. We protected our national interest.
The idea of these “protection” policies is to encourage these competitors to pay better wages, improve worker safety and/or stop polluting. This way their own economy and environment could improve and their workers would be able to buy the things that we make. Used this way, the policy of protectionism improves living standards for workers everywhere, while growing our economy and improving our standard of living in the process.
The idea of “free trade” theorizes that without “government” involvement these disadvantages will disappear and prices will eventually reflect supply and demand instead of tariffs and regulations. Of course, this ignores that government as constituted in democracies is a banding together of the citizens for mutual protection, empowerment and benefit. The result of “free trade’ is a downward spiral of wages, benefits, worker protection and environmental standards as countries race to the bottom in competition.
Expansion of trade is beneficial to all parties if done fairly. Of course, “fairly” is a difficult state to attain when powerful interests compete for dominance in rule-making. In this case we have the competing interests of American workers and manufacturers pitted against Chinese manufacturers. There are also the powerful interests of distributors and retailers who make a percentage off a sale, whatever the source of the goods, and Wall Streeters who buy up companies and demand short-term profits, and profit from debt.
This is where the opposition comes from. Certain powerful interests are doing just fine without any of this goody-goody do-gooder stuff, thank you, and they want things kept that way. So they will fight against changed in the status quo, no matter how necessary or beneficial to the rest of us. We see this so clearly in the health care reform fight and soon we will be hearing some outrageous lie on the order of “death panels” and “government takeover” to try to scare people away from fighting for their own jobs, wages and benefits by asking for reasonable trade and manufacturing policies.
Their primary scare word in use today is “protectionism.”
Part II will examine some of the specific myths surrounding the mystical and powerful word “protectionism.”

Misuse Of The Words Protectionism And Trade Is Making Us Poorer

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.
Can one be called “protectionist” just for pointing out when other countries are being smart? Maybe so. I’ll get to that in a minute, but first…
Language has tremendous power. People like George Lakoff and Drew Westin, who study the use of language in political discussion, say that our choice of words has the power to actually affect the “wiring” or neuron circuits that our brains use to think.
The corporate marketers and political persuaders have certainly learned the power of language to influence us. It has even gotten to the point where “neuromarketing” uses MRI and EEG to study how our brains react to certain stimuli so they can be used to market and persuade.
In politics I think that we have even reached a point where we give words more power and importance even than the ideas the words represent. In the Bush years we learned that the persuaders believed they could “create their own reality.

“That’s not the way the world really works anymore,” he [Bush administration official] continued. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.”

The influencers have become adept at scaring up the public into stampedes that can have sudden and dramatic effects on politicians. So lawmakers have gotten into the habit of basing their decisions on what they think (fear) the public believes (according to what Drudge and Fox are claiming they believe) rather than what is the best policy. And in fact, it is often the case that the public was behind the right policy all along. (Like with a health care public option — the manipulators had the politicians convinced it was “centrist” to oppose that.) Consequently, words are used as weapons by professionals who wish to distract us from things that are in front of our own faces.

Continue reading

On BBC in 15 Min

I am going to be on BBC’s BBC World Have Your Say radio program in 15 minutes. There is a ‘Listen Live’ button there.
I am arguing in favor of protectionism — protecting our workers’ wages and living standards from being undercut by low-cost goods made in non-democratic countries that exploit workers and the environment.
This is based on my posts Bring Back Protectionism and Protectionism Means Protecting Ourselves.
Gotta run…

Protectionism Means Protecting Ourselves

Protectionism literally means protecting ourselves.

The term is mostly used in the context of economics, where protectionism refers to policies or doctrines which “protect” businesses and “living wages” within a country by restricting or regulating trade between foreign nations.

The idea of protectionism is that when a competing country gains a trade advantage by paying its workers too little or having poor or no worker safety protections, or by allowing pollution of the environment, then we apply a tariff to their goods, so their goods cost the same here as our own goods, and that advantage does not undermine our own wages or safety or pollution standards.
Under conservative ideology, of course, protecting ourselves is a bad thing. Some people make a lot of money for themselves by undermining our wage, safety and pollution standards. So they tell us that protecting ourselves is wrong. The result is that conservative trade agreements that we have now that apply downward pressure on all the wages in the world.
Imagine if the workers in China or Mexico, etc. made enough money to buy the things we make here! That would be the use of our tariffs to apply an upwards pressure on other countries.

Bring Back Protectionism

America used to have a policy of protecting our wages against unfair competition from low-wage countries. We placed a tariff on imported goods made by workers who were paid substandard wages. We protected our national interest.
The idea was to encourage the companies that made those goods to pay better wages. This way their countries’ economies would improve and their workers would be able to buy the things that we make. Thus, the policy of protectionism was a way to improve living standards for workers everywhere, growing our own economy and improving our standard of living in the process.
The money collected from the tariffs was used for our common good: for example, it was spent on improving our country’s infrastructure and education system (including science, research and development) so we could retain and improve our competitive position, as well as retraining workers whose industries were affected by changes in trade patterns.
Protectionism was generally our country’s policy until a few decades ago. That was back when our country was OUR country — for We, the People — and our economy was OUR economy. And it worked. Our living standard continually improved. Then we changed to a “free trade” policy, meaning our workers work pretty much for “free” and big corporations are “free” to do anything they want. Additionally, without the revenue from tariffs, we have to tax our manufacturers more heavily, which makes them even less competitive internationally.
Since then average wages have stagnated and our pensions and health insurance have been disappearing, as have our savings. The country’s trade debt has been increasing alarmingly. And corporate control over all of us has become near-total. Corporations are able to get their way by intimidating employees with the fear of losing our jobs to outsourcing, and intimidate governments by threatening to move to lower wage countries.
So it is time to bring back protectionism. It worked.