- The Washington Times - Monday, February 25, 2008

ANALYSIS/OPINION:

The presidential primary exit polls in Wisconsin last week reconfirmed that the U.S. economy was the No. 1 issue on voters’ minds, as it is across the nation. But the most troubling part of the polls’ findings was what voters blamed for the economic downturn: free trade agreements that have opened up foreign markets across the globe to American goods and services.

Like many other manufacturing states, Wisconsin has lost factory jobs as companies downsized in a changing economy and moved some of their operations overseas. Many Wisconsin voters blamed trade for the economy’s decline.

In fact, trade is one of the strengths in Wisconsin’s economy. The Badger State’s exports rose by 15 percent in 2006, following a 17.4-percent rise in 2005. Figures for last year are not in yet but are expected to be robust.

In dollar terms, Wisconsin’s exports totaled $17.2 billion in 2006, up by 64 percent since 2001. Its largest export industries were in construction, farming and industrial machinery, plus engines and power transmission equipment.

Wisconsinites manufacture forklifts, compressors, hydraulic jacks, tractors and bulldozers, and if you follow America’s global export trade business, you know U.S. agricultural and construction equipment has been selling like hot cakes overseas.

Who are they selling this stuff to? Canada was the largest importer of Wisconsin’s products ($5.4 billion), followed by Mexico ($1.9 billion), China ($870 million), Japan ($739 million), and the United Kingdom ($686 million). But they also sell to many other countries, including Australia, Belgium, Saudi Arabia, Venezuela and Bangladesh. Oshkosh Truck signed a $4.9 million contract with the Egyptian Defense Ministry last year. Harley-Davidson is roaring into China’s motorcycle market, opening its first dealership in that country.

These export industries are responsible for many jobs and the people in Wisconsin who have them do not blame trade — on which so many of their jobs depend — for the rough patch the economy is going through.

A lot of things are responsible for the current economic downturn, but clearly the decline in the housing and credit markets and $100-a-barrel oil are the chief causes of what ails us as their repercussions ripple across the U.S. economy.

Wisconsin voters know what they see, of course, and the trend in lost factory jobs has not escaped them, even though U.S. manufacturing makes and sells more than ever before as a result of new technology and rising productivity.

Still, a majority of Americans believe the deindustrialization myth and the frequent claim that “America doesn’t make much anymore.” Many politicians, including a few presidential candidates who should know better, spread this disinformation.

Both Hillary Clinton and Barack Obama have been bashing trade deals in their campaigns, and they worked that issue in Wisconsin to attract votes. People who believe trade killed jobs in the state gave them their support.

But turning away from trade agreements, now and in the future, will not strengthen our economy but only weaken it. There is nothing wrong with the economy in Wisconsin or the rest of the country that cannot be helped by opening overseas markets to our products and services. U.S. export sales have been running at about $1.3 trillion a year and that figure will climb as a result of an expanding world economy and a weaker dollar that is making our products more competitive.

I do not think the trend in manufacturing downsizing will change in the years to come because technology allows us to make more things faster, cheaper and with fewer workers. But if Mrs. Clinton and Mr. Obama want to expand the U.S. manufacturing base while helping American workers, expanding overseas trading markets for things made-in-the-U.S.A. should be at the top of their list.

No. 2 on that list should be cutting the corporate income tax from 35 percent to 20 percent or lower. We have the second-highest tax rate on corporations in the industrialized world, after Japan. A lower rate would make us more competitive with the rest of the world, which is where our economic future lies.

“The claim that automation and international trade will create a large class of permanently unemployed American workers remains as fuzzy as ever,” writes economist Stephen Rose — who writing book titled “Mythonomics” — in The Washington Post. One of those myths is that because of trade with China and India, “the United States has become a nation of low-paid service workers destined for a high rate of unemployment.” But Mr. Rose notes that Commerce Department data shows “that even at the state level, including in Midwestern ‘Rust Belt’ states, employment is up at least 14 percent since 1993, the year the North American Free Trade Agreement was passed.”

We need to open up more markets to more trade, not less, as the Malthusians would have us do. For openers, let’s drop the economic sanctions with Cuba and sell them whatever they want.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.


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