| Source: Continuous Improvement Associates http://www.exponentialimprovement.com/cms/dptradedecept.shtml Social Issues I was reminded of the despicable Aug 2007 Denver Post editorial below -- "conservatives" label it as "liberal" don't you know? -- and my response to it when I read the Coalition for a Prosperous America's TradeReform.org blog entry: Yikes! NAFTA hate speech! This blog entry notes that Carlos Gutierrez, U.S. Secretary of Commerce, echos "wacko free trader talking points." His 3/1/08 op-ed, "Stop Hating on NAFTA, extolls the benefits of exports and how "this trade benefits American workers who make the products we send abroad, American farmers who grow the agricultural exports, and American families and consumers who have more choices in our stores." What Gutierrez omits is that imports far, far exceed exports ... by $712B in 2007. That's inconvenient to mention because the offshoring of production to use cheap foreign labor with no labor or environmental standards has undercut the quality and pay of American jobs. And corporations, unable to fully externalize costs in the U.S., have found they can do that very nicely by offshoring (see 'Free Trade' and the Environment). The TradeReform blog post hits the target by stating: "Just talk about exports. Too many imports? Doesn't fit the talking points. Never mind." But actually, this is standard fare, not just from a "wacko free trader" Republican administration, but also in the so-called "liberal media" in general. The Denver Post editorial below did exactly the same thing. It calls criticism of current trade policy, and NAFTA in particular, as "pandering" that's bad for business and workers. While nothing could be further from the truth (see The NAFTA Nemesis that resulted in exports up 3X, but imports up 5X), The Denver Post makes this fraudulent point the same way Gutierrez does. It just talks about exports and ignores imports. That's liike doing accounting by crediting receipts, but ignoring expenses. And that's completely divorced from reality. The Denver Post did not print my letter (below) and did not respond. Why would The Denver Post print such a blatantly biased editorial that distorts the reality of "trade" and what it's doing to America? It's not because they don't understand that imports overwhelming exports is a problem. Any fool can recognize that anything so increasingly out of balance will end in disaster. See The Trade Deficit and the Fallacy of Composition to understand why. The media does this because it's corporate and its advertisers are corporate. Their advertisers are the "import companies" (e.g., Wal-Mart-like "big box" stores and large retail chains) that benefit from cheap imports and do not want to see it curtailed, no matter what the cost to the U.S. economy and U.S. citizens. As I document in The Tangle of Growth overview (p. 12), the media are part of what's known as the "growth machine" ... entities which are naturally organized by the profit motives they share. Wal-Mart-like "import companies" are the polar opposite of primary employers an economy needs to bring in an excess of dollars over dollars sent out. They don't ship goods out to bring dollars in. They send their funds to company headquarters every night so they don't recirculate. Their employees shop there, so much of their income doesn't circulate in the community. See Principles of Economic Development. So the media's alliance with "import companies" produces their natural bias against printing anything about the economic disaster that's coming to the U.S. because of current "trade" policies. After all, current "trade" policies pump up of corporate profits ... at least for a while. Some believe that improved "media relations" will modify the message distributed in the media. This might work if the media didn't understand, or was even neutral on, the issue. But this isn't the case; media interests are not served by printing the facts. The media is a major part of the problem and all the "media relations" in the world won't change that. After posting this article I found this that echoes what I wrote above: A Carpet Of Dollars Can't Sop Up All The Red Ink. Every election since Nixon, our candidates, one and all, promise to make trade deals that aren't double deals. Yet every one of them does the double deals. Why is this? We just have to look at who is paying for our elections. The main top individual donors pouring millions into elections as well as the media that mediates these things are one and all, united in their desire for open borders and bad trade deals for the US workers. So here's the DP editorial, my response, and the data I sent along with it. Note that Rocky Mountain News readers even regard The Denver Post as "liberal." It is not and it's about time I canceled it just as I canceled The Gazette years ago, because it's pegged to the far, far right. Even the Colorado Springs Independent (decried as liberal) will not return my multiple calls and e-mails on this. DP editorial, 8/20/07 Pandering on trade policy bad for business, workers By The Denver Post Editorial Board One of the more harmful results of this early presidential contest has been the introduction of election-year political pandering to the trade debate in Congress. The result may be a return to protectionist policies that will force American consumers to pay higher prices while costing U.S. workers thousands of export-related jobs. Every U.S. president since World War II, Republican or Democrat, has fought to reduce the kind of trade barriers that triggered the Great Depression of the 1930s. For its part, the Bush administration has followed the fine example set by its Democratic predecessor, Bill Clinton, by seeking approval of free trade agreements with South Korea, Panama, Peru and Colombia. But the Democrat-controlled Congress has so far balked - in part because of the desire of presidential hopefuls to curry favor with small but noisy special interests opposed to expanding trade. Even Sen. Hillary Clinton banged the protectionist drum in a recent appearance before the AFL-CIO by assailing the landmark North American Free Trade Agreement. "NAFTA and the way it's been implemented has hurt a lot of American workers," Sen. Clinton said, adding she has been a critic of NAFTA "for many years." That's a curious thing for the wife of Bill Clinton to say, since NAFTA was approved by Congress on Clinton's presidential watch and with his strong support. U.S. exports to Mexico tripled after the landmark trade agreement went into effect. Colorado businesses and workers have thrived in the climate of liberalized trade fostered by NAFTA and other trade agreements. In 2006, businesses in Colorado exported $8 billion worth of manufactured goods to foreign customers, according to the U.S. Chamber of Commerce. Colorado also has benefited from foreign investment that has followed in the wake of freer international trade. Some 71,400 workers in Colorado are employed by foreign companies that have invested in the U.S. And foreign customers bought $675 million worth of Colorado agricultural products in 2005. Protectionists seem to believe that foreign customers will go on buying U.S. products even if we erect barriers against the goods they try to sell to us. The truth is exactly the opposite: The trade pacts now pending before Congress are designed to knock down existing barriers to U.S. exports. As The Detroit News noted on Aug. 12, "The U.S.-South Korea Free Trade Agreement, along with agreements proposed for Colombia, Peru and Panama, would give American companies access to markets that were previously mostly off-limits. The Korean pact eliminates the 8 percent tariff on passenger cars that South Korea imposed (compared with 2.5 percent in the United States) and removes 95 percent of tariffs on consumer and industrial products. Nearly all other tariffs will be wiped out within 10 years. Despite the rhetoric against such opportunities, those are good things for Michigan." In this case, what's good for Michigan is also good for Colorado - and for America. Congress should approve these job-creating trade pacts when it returns from its August vacation. My response, 8/23/07. Things are worse since I wrote this. As of Dec 07, it's 3.7M manufacturing and 648,000 IT jobs lost. And the Advanced Technology Products Trade Balance has gone from +$38.4B in 1991 to -$50.7B now. It's not just low tech jobs that are going. Regarding your 8/20 editorial (below), Pandering on trade policy bad for business, workers. The Denver Post editorial states, correctly and glowingly, that "U.S. exports to Mexico tripled after the landmark trade agreement [NAFTA] went into effect." What it omits is that imports increased by a factor of five! And the trade balance went from a positive $1.7 billion in 1993 to a negative $64.3B in 2006. Hello? Trade deficits and borrowing are not good for America. Heck, it's not even "trade." It's "transfer of the factors of production." It's "labor arbitrage" that pits U.S. workers against an enormous reservoir of extremely low paid workers in Mexico, China and India. The idea is to build products over there so corporations don't have to build them over here using a cost of labor that can support an American's mortgage payment. That "71,400 workers in Colorado are employed by foreign companies that have invested in the U.S." is not a result of "investment." It's a result of selling off U.S. companies and magically reclassifying those workers as now employed by foreign companies. You promote the myth that "trade barriers ... triggered the Great Depression of the 1930s." GNP did fall by 46 percent between1929 and 1933. But net exports fell by only $0.7 billion while domestic spending fell by an enormous $47.3 billion; that's 1.5 and 98.5 percent of GNP, respectively. Blame the Great Depression on the 1.5 percent problem? Absurd. The problem was the collapse of a speculative bubble like the one we have now. It's not "small but noisy special interests opposed to expanding trade," it's Americans who know it's not "trade"; it's offshoring that's sucking good jobs out of the U.S. The "special interests" are the corporations making a mint from undermining the U.S. economy. A complaint that "protectionist policies ... will force American consumers to pay higher prices while costing U.S. workers thousands of export-related jobs" loses perspective. The U.S. has lost 3.6 million manufacturing jobs since March 98 and 627,000 IT jobs since March 01. Job losses are far greater than any gain in export jobs because imports so greatly exceed exports. In 2006 exports totaled $1,446 billion with imports of $2,204 billion. A deficit of $759 billion spells an enormous net loss of jobs. Concern about losing "thousands of export-related jobs" is ridiculous. What's worse, the U.S. subsidizes exporting jobs. This "reverse protectionism" encourages the flight of industry and jobs from the U.S. Here are a few ways how: Companies indefinitely defer paying taxes on income from foreign subsidiaries, get investment tax credits even when moving manufacturing offshore so the U.S. doesn't fully benefit, move headquarters to tax havens, engage in flawed transfer pricing schemes to avoid U.S. taxes, write-off the costs of shutting down a factories in the U.S. to offshore work and, adding insult to injury, write-off the costs of requiring its U.S. employees, as their last duties before being fired, to train the foreign employees to do their jobs. All this must stop. Sometime around 2012 to 2014, the U.S. cumulative trade deficit will equal the U.S. GDP. This means Americans would have to work for a year, with nothing going to themselves, but everything going to pay back the money we've borrowed and buy back the companies, roads, ports, etc. that have been sold to foreign countries. This is an economic earthquake waiting to happen. It endangers U.S. national and economic security when the U.S. owes so much to a Chinese dictatorship that threatens a "nuclear option" to destroy the value of the U.S. dollar. This makes the U.S. and the world vulnerable to a massive economic crisis. If we don't achieve balanced trade, and soon, we're going to see a Great Great Depression as the dollar falls like a rock and we get a hyperinflationary depression. All trade pacts should be canceled and rewritten to promote "balanced trade," not protectionism, and not what's falsely called "free trade." The Denver Post is like an ostrich with its head in the sand. Stop pandering to corporate special interests and right-wing ideology. Instead, how about promoting the health of the U.S. economy? Bob Powell Bob Powell, Ph.D., MBA has been involved for over 4 years with the Manufacturing Task Force in Colorado Springs. Robert E. Powell, Ph.D., MBA See the graphs at The Trade Deficit and the Fallacy of Composition. Look up job losses here. I honestly don't understand why you promote policies that are destroying the U.S. economy by presenting such obviously biased and false arguments. Here's the data on Mexico from Trade in Goods (Imports, Exports and Trade Balance) with Mexico ($ in millions) 2006 Ratios Exports |