Thursday, September 20, 2007

The Audacity of Everybody Else

It is a point that's been made by historians for some time now: no country stays on top for more than three generations.

My friends, we are the third generation... And so it is natural that as we gaze out from the pinnacle of American hegemony, we see on all sides, countries conspiring and cheating to knock us from our rightful place at the top of the world.

Our gripes may take the form of our traditional party platforms, but the crux of the complaint is the same: we can't compete and it's everybody's fault but our own.

There was an editorial in the LA Times this morning, lambasting conservatives for their protectionist opposition to a Texas freeway project designed to expedite trade with Mexico. The editorial began, "The U.S. is known for its 'paranoid style' of politics, so brace yourself for the next Big Scare coming down the pike (literally)-- the Trans-Texas Corridor. Isolationist conservatives, emboldened by their jihad last year against the Dubai Ports World deal, have identified this road project as the spearhead of a conspiracy to dissolve the United States of America."

It's funny, I'll give them that. But there are just as many "paranoid" and absurdly isolationist policies coming from the Left.

The following is a quote from Sen. Bernie Sanders' website (Independent from Vermont):

"Senator Sanders is a leading opponent of our disastrous trade policies, including NAFTA, CAFTA, PNTR with China, and others. Sanders believes that our unfettered free trade policies have largely contributed to our shrinking middle class, job loss, and the ever-widening gap between the rich and poor. If the United States is to remain a major industrial power, producing real products and creating good paying jobs, Sanders believes that we must develop trade policies with Mexico, China and other countries that protect not just the CEOs of large corporations, but the working people of our country.

Over the past 6 years, due to our unfettered free trade policy, the U.S. has lost over 3 million manufacturing workers, including over 10,000 in Vermont. In 2006, we experienced a record breaking $763 billion trade deficit. The U.S. trade deficit with China alone was $232 billion, the largest-ever bilateral trade deficit with any country. Sanders believes that trade is a good thing, but it must be based on principles that are fair to American workers. The U.S. Congress can no longer allow corporate America to sell-out the middle class and move our economy abroad."

I get tickled anytime I hear Americans talk about "fair" trade policy. This is absurd. Anybody who knows anything about our trade policy for that last 60 years knows that our policies haven't exactly been "fair". We have used our mighty position in the world (justifiably at times) to dictate our terms of trade to everybody else. We've been Wal-Mart: 'If you want to do business with us, it's going to be on our terms- and it's not going to be to your advantage.'

For you patriotic naysayers out there, a good documentary to explore this principle is Life and Debt. It looks at the IMF's policies in Jamaica. Here's a quick and crude example: Jamaica was extremely cash-strapped. They needed money to invest in infrastructure of all manor and variety. Reluctantly, they went to the IMF. The IMF says, "sure, you can have some money... but you're going to need to drop all of your protective tariffs, because if you want to be a member of the global economy, free trade is the only way..."

So, long story short, the Jamaicans took the deal and dropped their protective tariffs. The net effect was that Jamaican farmers, who had been feeding their population for decades, now had to compete head to head with American farmers. It wasn't exactly a positive result for the Jamaican agriculture industry.

As you probably know, American farmers are armed with massive acreage, GPS systems, millions of dollars worth of equipment, and oh yes, billions of dollars in subsidies.

There was no way the Jamaicans were going to be able to compete. In the years since, their farms have all but shut down. Once successful potato farmers now eat Idaho spuds because there is no market for their own goods. They're too expensive!

As you might expect, the Jamaican economy was devastated. But fortunately for them, their integration into the Global Economy was there to cushion the fall. Again at the behest of the IMF, the Jamaican government established 'free trade zones' (FTZs) throughout the country. American clothing companies (among others) started taking advantage of the cheap labor and tariff-free manufacturing.

Meanwhile, some poor garment worker in North Carolina was losing his job. He started furiously writing letters to CEOs and Congressmen excoriating them for moving off-shore to the detriment of American workers. It's not fair! We can't compete! We must have protective tariffs that preserve the American apparel industry!

This is silly. Americans whining about trade policy... about how unfair China, India, and our large multi-nationals are being is just about as hypocritical as it gets. Now I'm not an outright apologist for America, and while we have certainly done things all over the world that I'm not proud of, we made the most of the situation. And now that others are doing the same, we cry foul. That's ridiculous.

The point was made especially well in The World is Flat (Thomas Friedman) by a young Indian CEO, Rajesh Rao: "Instead of complaining about outsourcing, Americans and Western Europeans would 'be better off thinking about how you can raise your bar and raise yourselves into doing something better. Americans have consistently led in innovation over the last century. Americans whining- we have never seen that before. People like me have learned a lot from Americans. We have learned to become a little more aggressive in the way we market ourselves, which is something we would not have done given our typical British background.'"

Yet this 'whining' Rajesh refers to (and not raising our own bar) seems to be the cornerstone of our future trade policy:

If only China would revalue its currency, then American companies could compete. If only our corporations were less concerned about making money and more concerned about American workers, then American jobs would be secure. If only there weren't all the 'illegals' running around, then American wages would be higher.

I'm sorry, you all can kiss my ass. If we want to be competitive, we have to compete. That's the crux of the capitalist system we have done so well with. But we're not competing. We're resting on our laurels (or our couches). And while we are watching Monday Night Football, there are a billion Chinese and Indian students rising at 5 am for another eighteen hour day of study and work. They are simply working harder than we are... and we work hard.

If we can't work harder, we better work smarter. (I better finish this up so I can run to class...)

One final thought: Tom Friedman made another great point in his book: There are 1300 "one-in-a-million" people in China. We only have 330. So basically, we better be studying harder than they are. We really can't afford to rely on protectionist trade policy to make up for our laziness. We can't afford not be hungry anymore. We can't afford to feel entitled to our prosperity. And we certainly can't afford to be appalled at the audacity of anyone else who tries to use our system to achieve some of the same prosperity we have. Simply put, we don't have time to whine because we're losing at our own game- and besides, nobody is listening anyway.

Eh, such is the plight of the third generation. It's just too bad our kids will be the fourth...

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