War with China Update: US to China - Free Trade or Great Wall

At inthesetimes.com, David Sirota has made a short-sighted plea for Democrats to make Free Trade the campaign issue in 2006. Not that this hasn't been tried already, and not because Sirota truly understands the issue, but

he is dead on.

Basically his argument is - Free Trade isn't working.

Iowa

In its report on the “State of Working Iowa,” the Iowa Policy Project notes that Iowa’s recent loss of thousands of good-paying jobs has been “driven partly by the recession, but also by the impact of global trade on high-wage manufacturing in Iowa, the upper Midwest, and the nation.” It notes that Iowans participating in retraining programs for workers displaced by free trade are making, on average, only 62 percent as much as the jobs they lost.

South Carolina

According to the Bureau of Labor Statistics, South Carolina has lost more than 71,000 manufacturing jobs since 2001. That a loss of more than one in five manufacturing jobs, with the textile and apparel industries being particularly hard hit from imports manufactured by cheap labor in China.

This is why even South Carolina Republicans like Sen. Lindsey Graham stake out positions challenging Washington’s corporate-backed consensus on trade.

New Hampshire

Since 2001, the state has lost more than 25,000 manufacturing jobs, or one quarter of its manufacturing workforce.

The effects of those job losses have been brutal. A 2004 study by the nonpartisan Economic Policy Institute found that industries expanding in New Hampshire pay roughly 35 percent less than industries that are contracting. That is among the largest gaps of any state in America.

But trade policies really get interesting with New Hampshire’s large white-collar workforce. According to the American Electronics Association (AEA), the Granite State has among the highest percentage of high-tech workers in the country. These workers, once natural proponents of free trade deals that open up markets for export goods, are now learning that technological advances mean their jobs can be exported, too. As a recent AEA press release noted, “New Hampshire’s tech industry has weathered a heavy storm,” having lost 7 percent of its workforce in 2003 alone. That has left many New Hampshire workers fearful for their jobs and frightened of the kind of mass outsourcing that is being encouraged by America’s free trade policy.

My responses in the subsequent debate are thus,

Sirota is right in saying this could be the big issue for Democrats. And it really could work, but only because Free Trade really isn’t.

Free Trade explicits an unrestrained exchange of goods and services between sovereign countries.

The international trade within even Western countries isn’t totally “free”; banana wars between the EU and the US, agricultural subsidies on both sides that end up only hurting developing countries, etc etc etc.

Trade between the West and other countries is like a one-way diode. China especially.

I am all for free trade, but we ain’t got it.

And that is the message the Democrats need to sell to America if it wants to win on this issue.

Posted at inthesetimes.com by Jay Cline on Apr 12, 2006 at 9:13 AM

I would also point out that appealing to this issue is the most effective method of undercutting the popular support that has been given to the Republican Party election after election.

Walter Russell Mead’s “Jacksonians” have given the critical electoral support the Republican Party has needed since 1994, nay, since 1980, first, for fighting to get big government off their backs, and then supporting the war on terror after 9/11

Mead’s Jacksonians are big on defense and small government. They also vote with their pocketbooks.

Instead of trying to turn the tide on war support, an end run into their pocketbooks would be quite effective.

knocko is quite right about the “in your face” strategy. The world of the Jacksonians is the physical neighborhood, not virtual global villages.

Posted at inthesetimes.com by Jay Cline on Apr 12, 2006 at 11:11 AM

"I am all for free trade,... "

Free trade demands free markets demanding comparative economic advantage. China has cheap labor, so it has an economic advantage in industries requiring intensive unskilled labor. America has a long prosperous economic history and has developed advance manufacturing techniques and management and, most importantly because of the high social value America places on entrepreneurial activities, has a very highly advanced technology industry. That is our comparative advantage.

"but we ain't got it"

Ricardo and Smith argued two hundred years ago that countries would mutually benefit if each focused on their own peculiar advantages and traded the fruits of their labor to one another.

Yet, while China is quite willing to be the world's manufacturing base, it does not want to rely on American technology and ingenuity. It consistently raises artificial costs to foreign technology businesses operating in China, stipulates a co-ownership of all assets and then steals the technology as it shuts down the "partnership".

Sorry, back to 3rd grade reading level.

China wants our crown jewels for a song.

Without an underlying agreement on the principles of economic comparative advantages, the benefits of free trade as postulated by Ricardo and Smith evaporate.

Ergo, no free trade. Just an unfair and unbalanced economic system that loads the dice in China's favor. uh, sorry. Let me dumb it up again. Can you spell R-A-P-E?

"I am all for free trade,... "

Ergo, I am all for any economic, political and military coercion we can employ to force China to play by the rules.

If China is not serious about playing by the rules, they can bloody well finish their Great Wall. I am sure we can help with two or three nuclear powered carrier battle groups. Read any good Chinese history books lately, circa 1500-1900?

(errata: unfortunately, Chinese hegemony is extending its colonial interests to Africa.)

(unpublished at inthesetimes.com)

This unbalance won't go on forever. At some point, America will react negatively, and with great populist gusto, to all this. China has oft been quoted, to its own delight, that they are seeking global dominance peacefully. Somehow that is supposed to make everything right and fair.

Do you really believe that the Chinese will stay the peaceful course once the 21st Century equivalents of the 1930 Hawley-Smoot Tariff Acts are passed? Do you really believe they will give up their hard-won stolen goods without a fight?

I hope the Democrats are wildly successful in 2006 on this issue. Bush is not running in 2008. The Republican Party is not beholden to his free trade agenda. We need to pull back a bit from the free trade agenda and rebalance the equations. If the Republicans take enough of a beating over this issue in 2006, they might start addressing the unfairness in the free trade issue, without abandoning the core concepts as the Democrats undoubtedly would, and take corrective action before it becomes even more imperative, and deadly.

Or, to steal Sirota's thunder, if the Republican 2008 Presidential candidate can

make an indictment of free trade central to their campaign, they will be tapping into exactly the kind of intense outrage that fuels successful insurgent candidacies.

Let's keep the insurgency within the family, ok folks?