Right On: Obama was right, Trump is wrong on international trade

Stock image, St. George News

OPINION — I seldom agreed with Obama but on international trade, he was on target.

In contrast, Trump is dead wrong. So were Hillary Clinton and Bernie Sanders.

Obama’s administration negotiated the Trans Pacific Partnership trade agreement with 11 Pacific Rim countries. The U.S. insisted on environmental, patent and labor protections in addition to lowering tariffs.

I am in favor of the TPP and similar multinational pacts. Call me a global elitist if you will, but international trade is a critical component of our modern economy.

Following World War II, agreements of this kind fostered global prosperity. For example the Kennedy Round in the 1960s was a huge success.

No country has benefitted more than the United States from increasingly free worldwide trade. Our products and services and the companies that provide them span the globe today. One measure of trade’s benefit to the United States is the controversial $2.1 trillion in cash earned by U.S. companies overseas.

Populist rhetoric in the last election cycle has given international trade an undeserved bad name. Sanders forced Hillary Clinton to disavow the TPP that she helped negotiate while serving as Secretary of State.

Trump’s election was due in no small part to his “America First” trade bashing. His populist message resonated with voters worried about their economic future. If elected, he promised to abandon TPP and restore manufacturing jobs.

Hoping to restore these jobs, Trump proposes to isolate our economy from the powerful worldwide market forces that foster innovation, greater efficiency and new products and services. He’s on a fool’s errand.

Philosopher and theologian Michael Novak in his seminal book “The Spirit of Democratic Capitalism,” called free markets “a force of nature.” Attempts to use the government’s powers to stymie them invariably fail. Ask the Russians, Cubans and Venezuelans.

I agree with the liberal website Salon that Trump’s showboating efforts to convince Carrier Corp. to keep jobs in the country was a public relations stunt and a bad precedent.

It is a fact that American workers have been displaced by foreign workers as trade has opened up new sources. Nonetheless our economy is three times as big as it was in 1990 and manufacturing output has doubled in the last three decades. U.S. exports of goods and services have quadrupled over the past 25 years.

Automation has a far bigger impact than trade on American workers. To those who champion tariff barriers to protect jobs I ask, do you also oppose automation to protect jobs?

Would you bring back handcrafted automobiles to replace assembly lines? Are you “all in” for legions of file clerks shuffling paper records? How about replacing the backhoe with picks and shovels?

These jobs of the past and thousands like them have been mechanized, automated and computerized, eliminating millions of jobs. Yet we are close to full employment today.

Renowned economist Joseph Schumpeter called this process “creative destruction.” Jobs, companies and entire industries evolve or die as their products are no longer in demand. Think wood-burning stoves replaced by gas and electric cooktops.

New companies arise, providing products and services often undreamed of in prior years. Think Apple, Amazon and Uber.

Foreign workers impact American jobs in another way. Talented immigrants with science, technology, engineering and math skills fill many U.S. jobs. In 2014, 13 percent of our population was foreign-born while over 21 percent of STEM workers were foreign-born.

Over half of today’s 44 startup companies valued at a billion dollars or more were founded by immigrants.

How did this happen? As a country, we are failing to produce enough STEM graduates. Hundreds of thousands of STEM jobs are unfilled.

Foreign-born workers fill some of this gap. The alternative: even more unfilled positions here while these workers start competing companies in other countries.

Some native-born STEM workers complain that immigrants will work for lower salaries, putting downward pressure on all STEM salaries. Downward pressure, if it exists, is more than balanced by companies competing to fill open jobs, putting upward pressure on salaries.

When any country pretends to “protect its workers” by creating trade and immigration barriers, it is in fact catering to a small number of industries and workers. The result is artificially higher prices paid by all consumers – in effect a tax on you and me – to save jobs and shareholders in industries with political clout. This kind of protectionism eventually collapses.

I empathize with those whose jobs are impacted by imports, automation or immigrants. We have a collective responsibility to help these people transition to new work in our dynamic, ever-changing economy. We can do so without penalizing our standard of living with protectionist trade barriers.

So what does all this have to do with Southern Utah? Plenty as it turns out.

Chances are good that you have many items in your home that were produced in another country: electronics, kitchen gadgets, clothing and likely the device that you’re using to read this column.

Consider your own purchases. Identical items lie side-by-side on a store shelf, one costing $5 made in China, the other costing $8 made in the U.S. Identical blouses hang on a rack, one costing $19 made in Bangladesh, the other costing $29 made in the U.S. How many of us willingly pay substantially more for an otherwise identical item? How many make purchase decisions based on country of origin?

Rest in peace, TPP. We’ll be worse off without you.

Howard Sierer is an opinion columnist for St. George News. The opinions stated in this article are his own and may not be representative of St. George News.

Email: hsierer@stgeorgeutah.com

Twitter: @STGnews

Copyright St. George News, SaintGeorgeUtah.com LLC, 2017, all rights reserved.

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11 Comments

  • Brian June 1, 2017 at 9:59 am

    Howard, I couldn’t disagree with you more on the TPP. It was an awful agreement for America, and the way it was created (in absolute secrecy, including from most of our elected officials, and binding those that could see it with an NDA so bad they could go to prison for mentioning it casually over lunch) was completely un-American.

    I really enjoy your articles and generally agree with you, but you’re off by a mile on this one.

    Here are just a few points that make TPP horrible for America: http://inthesetimes.com/article/18695/TPP_Free-Trade_Globalization_Obama

    TPP is a lot like net neutrality: people like the idea of an independent Internet where businesses can’t ruin it for profit. But the net neutrality law they passed is horrible and should be undone, and a law that actually gives us net neutrality should be passed (ie. a law that benefits the people, not a handful of companies and agendas that most of the people would oppose if they knew about it).

  • Craig June 1, 2017 at 10:37 am

    I could not disagree more.

  • comments June 1, 2017 at 11:45 am

    wow… Howard just outed himself as a full-on globalist, open borders supporter, and more than likely a neo-liberal.

    International trade has made everything cheap and disposable–turned us into a wasteful throw-away economy. Nothing seems built to last anymore, and Chinese products, even after all these years of being made there, are still inferior to pretty much any 1st world country’s products. Howard must be someone who has benefited personally from international trade with the 3rd world, ie investments etc. You can claim we all benefit from the cheap prices and throw-away Chinese garbage that’s packed to the ceiling into every box store, but the reality is far different.

    In my book, Howard has lost all credibility at this point.

    • tcrider June 1, 2017 at 5:23 pm

      I kinda like the chinese junk,
      I got a inverter welder from china and it works better than my lincoln.
      my bike has a lot of china parts on it, even though its made in u.s.
      most u.s. cars have some sort of china part in them, even if you think it doesn’t.
      I even bet half of the confederate flags these idiots are driving around with on their heaps
      are made in china.
      the dungle trump, never my steaming pile

      • comments June 2, 2017 at 10:59 am

        I was looking at new buick cars one day just out of curiosity. On the tag in the window it listed % of component from whatever source country. The buick listed it as something like 85% sourced from china. So the buick is essentially a Chinese car. Just thought it was interesting. Anyways nearly every product I’ve bought that used to be US made, when compared to the china replacement, I’ve never seen anything not go down in quality, period. Some of these RX generic drugs imported from china and india are abysmal with their quality control. Our FDA only has the ability to inspect a tiny fraction of factories and products from these places. It’s all a race to the bottom.

        • Henry June 2, 2017 at 7:36 pm

          You raised a good point, Bob. A person has to look at individual models, not just manufacturers, to determine the vehicles with the highest U.S. content. The vehicles currently with the highest domestic content are the Toyota Camry & Sienna and the Honda Accord & Odyssey.

          https://www.cars.com/articles/the-2016-carscom-american-made-index-1420684865874/

          • comments June 3, 2017 at 2:37 pm

            It’s a Buick envision and it is made in china, so the label must’ve said 95%. Yes H, it’s a strange thing that these Japanese-run companies are actually more american the the US-run ones. Only way I’d ever buy a Ford or GM product is… well they’d have to get awfully cheap ;).

  • Paul June 1, 2017 at 4:57 pm

    100% agree with Howard. Great piece. Spot on. Its well thought and researched. Globalist? I hope so? Populism, Nationalism, ethnocentrism…why? Its so naive to think or assume that “we” are the only people on the earth who matter. Build a wall? Why? Let’s build a 1000 bridges. Education is the real war we are fighting, as one can easily see from the previous comments.

    • comments June 1, 2017 at 11:45 pm

      Ok paul, if globalism is so wonderful why don’t you move to china and work in one of their sweatshops sewing garments for 35 cents an hour, or better yet Bangladesh; their wages are even lower. My immediate impression is that you’re a simpleton.

      • Paul June 2, 2017 at 3:12 pm

        Thankfully, simplicity is the gateway to brilliance. Globalism not nationalism. Peace out muggle.

  • Ladyk June 2, 2017 at 12:36 am

    Yikes Howard you couldn’t be more wrong. Brian is wright and makes many great points. TPP was an awful agreement that was damaging to the U.S. Obama had no clue what he was doing and made many many mistakes, ones we are paying for now and will for many years to come. Just ask all the IT people who are being removed from their jobs only to be replaced by foreign workers, sometimes at higher salaries. Obama did more to destroy this country than any other President in its history. He didn’t want to be President because he loved this country. He wanted to change it to its core. We aren’t where we are because he did such a good job. We are being torn apart from within because he did so much to divide and destroy us. The TPP is just one thing that was bad for this country and it couldn’t be more obvious.

    I hope I never see those 3 words (not TPP) again. Makes me sick just thinking about it.

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