The President Pivots to Jobs and the Deficit
While increased protectionism remains a real concern.
12:00 AM, Jan 23, 2010 • By IRWIN M. STELZER
The president has already imposed tariffs on tires and some steel products imported largely from China. The next target of the unions is Chinese-made glass. They point out that the World Trade Center’s Twin Towers were sheathed in good old made-in-the-U.S.A. glass, but the building that is springing up to replace it will be covered with glass imported from China. Whether that is because Chinese glass-makers receive government subsidies, as the unions allege, or because the Chinese are more efficient glassmakers, matters less to politicians, and to many Americans, than the symbolism of America’s new Freedom Tower being covered in Chinese glass.
Add to the mix the fact that many of the world’s leading economies are depending on export-led growth to get their economies out of recession, and that the Chinese show no signs of allowing their currency to float upward from the undervalued level at which it is pegged. These countries continue to see Americans as the world’s consumers of last resort, while at the same time calling on the U.S. to reduce its trade deficit.
What our trading partners see as the export of goods and services, our politicians will see as importing unemployment. True, consumers here benefit from lower-cost imports, even from those subsidized by job-hungry China. Consumers are the winners, workers the losers. And unlike consumers, unions are organized to put pressure on congress.
Policymakers live in dread of “unintended consequences,” unanticipated and undesirable results of their actions. One unintended consequence of Scott Brown’s election might just be greater reliance on protectionist measures by politicians who believe they have to cut unemployment now, regardless of the long-run consequences. And without increasing spending.
Another, and cheerier possibility, is that the Democrats’ new need for a bit of bipartisan cooperation from Republicans will produce legislative compromises of the sort that resulted in tax reform during the Reagan years and welfare reform when Bill Clinton occupied the White House, the sort of centrist compromise Americans prefer.
Irwin M. Stelzer is a contributing editor to THE WEEKLY STANDARD, director of economic policy studies at the Hudson Institute, and a columnist for the Sunday Times (London).
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