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February 23, 2006
Ports Sale and Protectionism
This may not be the final word on why this ports sale went to the UAE, however it seems to be the best reason I've heard so far. Consider, there are billions of greenbacks floating around overseas looking for a way to come home. The Arab countries have tons of our paper money, as does China, one of our biggest creditors. This is largely due to the trade imbalance caused by the importing of cheap overseas goods and imported oil.
Outwardly it seems like a real stupid idea to turn over our major seaports management to an Arab country that has a nexus with terrorists. Howeverm economists say it makes sense and politically speaking, it may be too late to back out now, because it could send the wrong message.
The port management deal was proposed, cleared and accepted before Bush even knew it was in the making (somebody sure goofed on that one.) Now he (Bush) is faced with supporting a vastly unpopular sale verses halting it for security concerns that would surely offend an ally and risk the destabilization of the overseas dollar. That later part could prove worse in economic terms than an outright terrorist attack. This is a very dicey economic situation we've created by our insatiable appetite for cheap foreign goods and this goes back long before Bush I was in knee pants.
A possible solution: There was a time (early 1900's) when America became a major industrial power and engaged in "protectionism" to protect us from being flooded by cheap foreign goods and damaging our labor force. It's now advocated by only a handful of people, but one of the more notables is former presidential candidate Pat Buchannon. He correctly points out, when protectionism was in full force American labor had it pretty good. We enjoyed nearly twice the mean income as our European counterparts. We had no deficit, taxes were low, and in fact there wasn't even a need for an income tax. Nearly 98% of everything we needed was made right here and the 2% of imports were heavily taxed (tariffs) to make our goods competitively priced.
All that changed when Republicans introduced an economic plan that all but did away with the "protective" tariffs. Over time this has resulted in a bonanza for big business, but at a price paid by American workers. It's been slowly costing them jobs while building a monstrously high trade imbalance. That trade imbalance has made us a debtor nation and empowered nations that might not have our best interests at heart.
It might be time to take a new look at protectionism as a way to stop the hemorrhage of dollars to overseas and to bolster the in-house production of certain key goods and industries, such as steel, aircraft and heavy equipment manufacturing, and anything else that is necessary to our national security.
Posted by Post Scripts at February 23, 2006 07:27 AM
Comments
Jack, we agree again. Surely, the sun will set in the east tonight.
I will quibble will only one part of your piece. Yes, the trade imbalance is one reason for the billions in greenbacks floating around overseas. But a more dangerous cause is the our own budget deficet and growing national debt.
Bush is borrowing 2 billion EVERY day. Roll that around in your head a few times. 2 billion. Each day.
I'll be the first to admit I was taken in by Clinton's free trade policies, including NAFTA. Plenty of promises, but they were all false. I feel sold out by Clinton. In my opinion, CAFTA will deliever even less for workers and the economy. It will be a boon for those companies that want to export our better paying jobs.
I, too, think it's high time we took a second look trade policies. Rather than free trade, let's call it fair trade.
--Drzal
Posted by: Drzal at February 26, 2006 04:56 PM