Wednesday, December 16, 2009

Debt: As American As Apple Pie

I’m having a hard time getting worked up about Congress temporarily raising the debt limit, partly because with our economy on the brink of collapse it seems like debt is the least of our worries, at least for the near future.

But also, let's face it folks: Debt is our national past-time. As I’ve blogged a gazillion times before (here and here, for starters) it seems debt is the only thing America manufactures anymore. Well, that and war machinery of course. And I simply don’t understand how we can have any kind of real economic recovery, including reducing the national debt, as long as we have waved a permanent goodbye to our manufacturing base.

At one time, Americans made things. I grew up with the “look for the union label ...” ditty playing on the TV. “Buy American” meant you really were buying something made in America, not something pieced together in a sweatshop by immigrant workers in the Northern Mariana Islands.

If we stop making things here, then how can we put people to work? It simply doesn’t make sense.

The current issue of Harper’s Magazine contains these recommendations for President Obama by Alan Tonelson, a research fellow at the U.S. Business and Industry Council. Tonelson, as his affiliation indicates, is concerned about America’s waning manufacturing base and its effect on our economy, and he fully embraces the so-called “protectionist” stance requiring those taking federal contracts to use American-made steel and other products.

He adds:
But the full potential of the Buy American approach has been limited by U.S. treaty obligations under NAFTA, and by our membership in the World Trade Organization. Hence, at the very least, the United States should declare these obligations suspended until the economic crisis has been vanquished. Buy American measures also should govern all federal support programs for specific companies and industries (e.g., the auto rescue), and industries-to-be slated for subsidies (e.g., alternative energy systems and other “green” manufactures). In addition, strategies are needed for attracting advanced production to the United States in areas where Buying American is no longer possible.

I never understood why a little protectionism was supposed to be a bad thing, especially since it’s something every other country does.

Two critical “do no harm” steps can further reduce American multinationals’ strong incentives to move production and jobs offshore. First, Washington should declare a moratorium on all new trade agreements until it figures out how to ensure that they promote more domestic production and employment. Second, if Congress does pass a climate-change bill, it must include stiff carbon tariffs. Otherwise, more and more American manufacturers will relocate to countries that lack complicated cap-and-trade programs or other limits on greenhouse-gas emissions.

A lot of this makes sense to me. Some of it might have repercussions--pissing off the Chinese might have them calling in our loans, for instance. But I don’t know why we don’t have some kind of tax discouraging multinationals from outsourcing their production.

I don’t know why it’s so damn hard to “buy American” in this globalized world: surely there can be a way of showing consumers whether 10%, 30% or 100% of a product is made in the USA.

And I don't know why our corporate overlords aren't interested in putting Americans back to work. Scratch that--I do know why. They're more concerned about profits, and outsourcing production to cheap labor countries like Vietnam and Honduras is more profitable. But now that our economy is in the toilet and unemployment is over 10%, Congress needs to take some drastic action to get people back to work. Ballooning the debt doesn't seem like a longterm solution, just as lowering interest rates was not a longterm solution.

People need jobs. Let's put people back to work first.