- - Monday, September 12, 2016

ANALYSIS/OPINION:

It’s time to put the brakes on globalization, not shut it down.

Freer movement of goods, technology, capital and people across borders offers enormous benefits but also imperils our civilization.

Think of what Americans would be driving today if Toyota and Honda had not taken Chevrolet and Ford to school with the Camry and Accord. Although General Motors ultimately needed a bailout, Ford transformed itself by integrating cutting-edge technologies into vehicles ordinary people can afford and now has customer loyalty to rival any Japanese competitor.

The annual competition between Apple and Samsung for the best smartphone has catapulted our lives into hyper productivity. It lets us go to our kid’s 4 p.m. soccer game without really leaving the office.

Still, for free trade to work everyone needs a chance to make something, but governments in places like Germany and China insist on gaming the system. They export more than they import by imposing administrative barriers on imports, currency schemes and subsidies.



For decades, German trading partners such as Greece and Spain borrowed to finance huge trade deficits and when their credit ran out, were thrust into terrible austerity and double-digit unemployment. Similarly, Americans are slowing selling their souls — in the form of trillions in Treasury securities that Beijing purchases and may ultimately use to blackmail an American president in a showdown over the South China Sea or some other hot spot.

China uses the vast wealth it has amassed through its $400 billion annual trade surplus with the United States to build a navy and purchase influence in Asia and elsewhere through business investments and foreign aid.

Rebalancing trade with China is not just about bringing back manufacturing jobs. It is vital to our national security.

Asian and American foreign investment has been mutually beneficial. Consider what GM learned from Toyota through its California joint venture to manufacture derivatives of the Corolla.

Similarly, American investments helped transform South Korea from an agricultural backwater in the 1950s and ‘60s into an advanced industrialized nation today. Ask American technology companies if Samsung is not a peer in every way.

Still, what American companies do with their money often adds too little to American prosperity.

Much of what American businesses sell to the world is intellectual property, and federal research grants, huge research and development tax breaks, and public financing for colleges of science and engineering support a continuous flow of innovations in everything from pharmaceuticals to industrial machinery to automation and artificial intelligence.

Yet, nominally high U.S. corporate tax rates and complex mitigation rules encourage U.S. multinationals to park earnings from intellectual property just about anywhere but in the United States through shell subsidiaries in tax havens — and they do.

Depending on your point of view, the tax revenues lost could be used to rebuild the Navy or invest in domestic needs.

Similarly, immigration has contributed mightily to American prosperity — for example, know-how to instigate our industrial revolution and nowadays to strengthen our research and development and entrepreneurial capacities. But unbridled and illegal immigration have increased unemployment and inequality. And neglect of the glue that holds us together — cultural assimilation — has eroded respect for our core values of tolerance, majority rule and minority rights.

All this undergirds the presidential campaign. Strip away the emotive language and charges on both sides, and the choices become remarkably clear.

Donald Trump wants to renegotiate our trade agreements to rebalance trade, reform corporate taxes in ways that virtually eliminate incentives to keep profits offshore, recalibrate immigration to the legitimate needs of our economy, and evaluate who we take on the basis of their skills and capacity to contribute to social cohesion — not further rip us apart.

Hillary Clinton is against free trade running for office but while secretary of State, presided over ratification of the disastrous 2012 U.S.-Korea free trade agreement that has cost Americans more than 100,000 jobs. She is effectively advocating unlimited immigration with little screening.

American businesses and foreign governments have adjusted their global investments and tax policies to exploit existing U.S. law and would resist change. The Clintons, through their family foundation and enormous speaking fees, have so vastly monetarized the political access she could offer as president that Hillary Clinton would be sorely challenged to act in, or even effectively evaluate, the national interest when lobbied by her benefactors.

Mr. Trump’s rhetoric makes his prescriptions less than pleasing but, ultimately, those are a bell that rings true.

Mrs. Clinton bellows for only herself.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist.

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