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Outside of the horrendous gambit of announcing a fraud investigation that appears designed to fail, Obama gave a decent enough speech last night. I liked the specificity on the Buffett rule – a minimum effective tax rate of 30% for millionaires – and the alternative minimum tax for corporations (a nice counterpoint to the far-right idea that everyone should pay “some” tax). The section on Senate reform – “I ask the Senate to pass a simple rule that all judicial and public service nominations receive a simple up or down vote within 90 days.” – at least highlights the problem. And in general, this was a speech in tandem with the Owasatomie speech, focused on achieving an economy that works for everyone and not just the 1%.
I don’t expect much of the laundry list to get accomplished, but there were some areas that provided hope. I thought the wrapping of the speech, with the Navy SEAL raid on bin Laden, and the intimation that we should all be as industrious and effective as people carrying out extra-judicial assassinations in night raids in Pakistan, was a little weird, to say the least.
But one intriguing item that Obama announced – and I believe by executive order without the need for Congress – was on a Trade Enforcement Unit:
US President Barack Obama has announced a new body to investigate unfair trade practices in countries such as China.
”I will not stand by when our competitors don’t play by the rules,” he said.
He was speaking in his third State of the Union address on Tuesday night in Washington DC.
During his presidency, he added, the US had ”brought trade cases against China at nearly twice the rate” of the previous administration.
As you can see from my comments on the financial fraud unit, I can find reason to be cynical about these enforcement agencies. But if you follow the facts, the President is correct that his Administration has been solid on bringing trade cases against China, on tires, on steel, on solar products, on rare earth minerals. And he’s gotten results. That may obviate the need for a Trade Enforcement Unit, but if it levels the playing field on trade with China, all the better.
Matthew Yglesias, neoliberal consensus purveyor that he is, found this part muddled and contradictory. He seems more annoyed that the economic message front-loaded manufacturing (“mercantilism” in his words). But he doesn’t much like the anti-globalization message:
Blocking an influx of cheap Chinese tires does, indeed, preserve jobs for tire-makers. But tire-buyers pay higher prices and presumably curtail their purchases of some other goods or services in exchange. Meanwhile, Chinese tire-makers have lost jobs and are now less likely to buy American soybeans or DVDs of our movies.
There’s no doubt that globalization has inflicted massive harms on individual American families and even whole communities. The reality that Chinese economic growth—in many ways the greatest success story of our time—has been painful for many should be a great teachable moment for a progressive president to make the case for a generous social safety net. The conservative article of faith that hard work and determination guarantee economic security is a now a cruel lie. People lose jobs because of shifts in global trade patterns, because of new technologies, and because of macroeconomic currents beyond their control. This is the nature of a dynamic capitalist economy, and to acknowledge it and the need for government countermeasures is in no way to repudiate the considerable virtues of the system.
I don’t really want to re-litigate NAFTA and China’s entry into the WTO. In truth, both sides miss the point that the best option for stateside economic growth with respect to China would be ending the artificially low value of the renminbi, so that their prices reflect reality and rise relative to ours to make US exports competitive.
But is this really an argument that you can’t have export-driven growth in a developed country anymore, so America should give up? That’s basically the argument my textile industry-working dad heard in the 1970s. Modern-day Germany would have a lot to say about such an argument. Yes, as Yglesias notes, they have a service sector. Most people purchase services. But a country of service providers selling things to one another looks, well it looks like the current United States. That’s not a particularly healthy economic outlook going forward.
Implicit in this response is that we should ignore unfair and illegal trade practices, because Wal-Mart needs to sell those cheap socks to people. I don’t subscribe to the view that we need to just give up on the workforce that built the middle class, as well as international trade law, and focus on making, I don’t know, iPhone apps.
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Heh. It would be fun to have Chinese do same.
Wonder who would come out ahead in that penis measuring contest.
This is completely wrong.
staffed by the bankster enforcement unit since they have a lot of idle capacity and time on their hands…… oblabla : i’m not a lib but i play one on tv……..
David,
We are so used to listening for the Republican dog whistles that we sometimes forget our Democrats are using the same tactic.
“trade enforcement” “China” “tires” is whistling too USW and AFL-CIO, in case you didn’t realize.
The problem with neoliberalist globalization is that the legal and accounting environments are not consistent across countries, and governments (even those professing neoliberal free trade) do create legal differences to empower certain industries, methods, and practices at the expense of others. In short, free trade never has, does not, and cannot exist. And if for a brief period it did, markets would destroy themselves in the same way the housing market was destroyed.
While China is a obvious target of public concern, there are likely other countries on the list for their effects on particular US industries.
The details on this will be fascinating to follow if they are public because you will start to see how various industries use government as their servant and which lobbyists act as their messengers. There is so much room here for lots of quid pro quo.
BLA,BLA,BLA..babbling,bringing back home manufacturing jobs,bla,bla..
dear Obama,you don’t feel and do what you said,actually you are out of touch,Unaffordable Health bla,bla.Peter Griffin in politics.!!
Big reelection speech…geez!!
The FDL live blog comments indicated disgust, weariness with his betrayals, and mocked his every word.
I thought he was talking to firedoglake.com, like he let us know he reads here, like we gave him his re-election syllabus and he wants to get an A in the course. I think he’s weary of reading DDay’s pointed revelations, analysis, and synthesis.
Hope you get a thank-you note for this one…
I love how people complain that if they raise the wages on workers that the prices of the goods will go up. Yeah, maybe a little. But you still have more money in your pocket even if the prices go up slightly. Because wage increase does not equal product cost increase tit for tat. Never has.
“ending the artificially low value of the renminbi” as suggested by DDay solves little – we have a tariff – if we have one – of about 2% versus the tariff against our exports in China of 25%.
Add to that the internal barriers, the demand for IP to be transfer to a Chinese company if you want that cheap manpower, and problems at ports for permits or rights to build, and you no longer have a pissing contest, a game measuring penis size, but you have an economic battle to which Obama brings a nail clipper and China brings a gun. The WTO must reform, or we need to get out of it, or we need to pass laws that prevent IP – almost always developed with at least minor, and often major, funding from the government – from being sold off by un-American American companies.
As usual Obama is kicking the can down the road and pretending real people are not screwing this country. The dance of “too much gov support” or “artificially low value of the renminbi” just hides the crimes – or what should be crimes – of the 1%.
Indeed that is my objection to DDay’s zeal to fine or destroy banks – it just moves money amongst the 1% – and no one goes to jail – and indeed the money being moved is from many little guys – shareholders – to members of the 1%.
“Too much gov support for exports” or “artificially low value of the renminbi” or “rule of law for banks” never gets to the 1% where they pay attention – going to jail or paying from personal funds. And without that incentive, nothing changes.
If he were serious, and we all know the reality of that, he would raise minimum wage $1.00 an hour to give workers the extra $40 a week and not defund SS. As for China, just on “American” companies that take advantage of slave labor and lax environmental enforcement there should be a 300% tariff imposed. As for a Special Enforcement Unit, does anyone think he would pay anymore heed to them than he has to the ones in place. He has abandoned the left completely, and is going for the “moderate middle” and is a complete fraud.
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The bottom line is that the tires sought primarily by low income Americans went up in price for a while until production ramped up in places like Thailand and Bangladesh. US makers had pretty well abandoned the super cheapie market anyway. So it may have meant a net loss of jobs (mostly for tire installers) as some purchases got postponed.
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Very true – indeed the studies show gov support for an “uneconomic” industry produces jobs that stay and keep the economy afloat – albeit also producing “bad” things like cheap steel prices from too many steel operations started by governments. Countries need jobs that do more than everyone selling something to everyone else and handling the money from those sales.
It is not like this is not known to the economists or anyone dealing with international questions (like actuaries :-) ) – heck the economists do the studies that prove the point. But for 40 years I’ve waited for a public trade policy that ignored the greed of the 1% in favor of our country’s prosperity. We did get prosperity in those years – albeit not totally skewed toward the 1% – but what the 1% did not get was an afterthought and certainly not because we planned our trade policy to maximize the good to the greatest number in America.
Re-litigate NAFTA and the Chinese entry into the WTO? And that would do what, even if you did want to do it?
This sentence is just plain sad.
They weren’t litigated in the first place, they were negotiated. They are treaties and trade agreements, not court cases for lawyers. And they were ratified by Congress. On top of which, neither is responsible for converting the economy to a service sector economy, that was “supply side economics”, and a lot of private sector boneheadedness. It’s a measure of how lopsidedly blame it on the um black guy in office here at this blog, that it somehow is not only blamed on the federal government exclusively, but on the executive branch entirely.
And where were WalMart, the High-Tech sector, and others when all this transfer to the service sector was going on? Why is NAFTA an agreement with Canada and Mexico and our manufacturing went first to Japan and Korea and the Asian Tigers and then to China?
How dumb can you get? Memory chips go wholesale to Japan at the start of the drain, WalMart starts forcing businesses to relocate their factories in China, but you blame it on Dodge Rams going to Mexico?
David, I agree that the Chinese are eating our lunch, not to mention breakfast and dinner. But the Chinese are sick of Westerners telling them what to do, and telling them to manage the RMB the way we want them to, is not going to fly.
Rather, we must take unilateral steps to restrict Chinese imports, industry by industry, just like China does — they are experts at gaming the WTO.
On the other hand, Corporate America likes to manufacture in China so they can keep profits up short term — at least until China decides it has learned (or stolen) as much US technology as it wants to, and can afford to freeze US corporations out. At that point America may try to fight back but we will be at a terrible disadvantage.
Btw, the US/ China trade looks the way it does now, in large part because corporations — the source of donations that both parties compete for — help write the WTO rules in the first place. You can’t expect them to want to change anything, and therefore you can’t expect Obama to change anything either. Obama’s “tough” talk on China is PR. The Chinese know it and so do Obama’s donors.
Actually my fellow Greek has his head up his -…. – After we lost control of the tire industry to Japan (which is not that low cost a place), it changed manufacturing methods, locations, and indeed we gained tire manufacturing in the US from plants being located here by EU folks.
Studies show massive volume beyond a certain point do not lower cost and indeed may increase it and cause quality control problems.
There are a lot of factors to every business decision – my observation is that logic is often ignored, and trendy decisions are made, esp. when those decisions benefit top management who leave before the bad starts to hit. Meanwhile US jobs are lost.
A major myth is the smarts of the folks that run manufacturing and finance – it doesn’t exist. Those at the top at best do branding well, at worst they just handle their family friends that they put on the board.
Don’t redo any entry to the WTO-
End the WTO.
GATT at least had limited powers – it did not claim the right to ignore your Constitution.
Fair trade’s been an idea for a long time – it is well past the point free trade was tossed and only fair trade agreements allowed.
Isn’t Obama the Pimp-in-Chief of the latest FTA’s with S. Korea, etc.? He does exhibit similarities with his idol Ronnie Reagan, they both lie rather convincingly.
Finally, someone who can translate Obama BS into English. Kudos
I don’t care what you do, just don’t lie about history. NAFTA didn’t cause jobs to flow to the Far East.
Pimp-In-Chief of the latest FTAs with Korea? And that’s supposed to explain jobs that went to Korea in the mid-1990s? Are you an expert in tachyon theory or something? I’m not saying don’t criticize, I’m saying don’t lie about the past.
The outflow of jobs and manufacturing in the 1990′s was a result of policies favored by George H.W. Bush’s other adopted, co-opted son, Bill Clinton. The current puppet is no different, he’s just implementing more Chicago School economic policy. Please point out the lie in my previous post. Here’s another fact you may find objectionable: Bill Clinton, Robert Rubin, and Phil and Wendy Gramm laid the foundation for our current economic disaster.
I agree – guess my writings skill – or rather the lack of same – caused a misunderstanding.
Nafta actually had environmental and worker protection side agreements.
Unlike the Obama treaties with S. Korea, etc.
But the WTO sees itself as ruler of trade and sees the side agreements – indeed anything other than tariffs and agreements to not impose obvious internal trade barriers – as not allowed for a WTO member – indeed local law on such matters is “overturned” per the WTO, where “overturned” means the other country gets to impose sanctions against your exports and you get “fined”.
Robert Rubin, and Phil and Wendy Gramm gave us the WTO, stopped the addon voluntary payroll deduction 401k account for everyone, stopped much regulation of derivatives, stopped much regulation of commodities, and with Greenspan stopped regulation of investment banks and hedge funds that acted like investment banks, pushing them to take over/take away the mortgage market from FDIC banks, leading to our unregulated mortgage and mortgage derivative markets.
Indeed the irony is that only thing that wasn’t an evil that lead to today’s crisis that they had a hand in was the modification of Glass-Steagall (The Banking Act of 1933) – as Krugman notes, the investment banks that caused the problems were under the Fed and Greenspan and never regulated by G-S, yet the Obama left keeps trying to sell Clinton as part of the evil via reference to the repeal of G-S’s separation of investment bank from deposit bank from insurance company.
The Clinton enforcement of the deferred tax rules (IRS Code Section 482) was the first in my career as head of the US Tax Department for an international insurance company.
That action slowed, but did not stop, the transfer of jobs overseas – a transfer that began in earnest under Reagan.