Will America Embrace Protectionism?
12:00 AM, Feb 4, 2012 • By IRWIN M. STELZER
The disadvantage at which this Chinese model of economic development has put U.S. firms has at long last prodded our government into action—not to mention the fact that this is an election year. In what John Neuffer of the Information Technology Industry Council called “a paradigm shift” in an interview with The Wall Street Journal, Secretary of State Hillary Clinton and Under Secretary of State Robert Hormats have joined Treasury Secretary Timothy Geithner in attacking these “distortions” that hurt American firms. Unfortunately, the Chinese don’t find this trio, or the U.S. government, sufficiently fearsome to change their policy. After all, Geithner conceded in Davos, “I don’t have magic answers.” In short, all of these threats are “words, words, words”, famously dismissed as mere annoyances by Eliza Doolittle in one of her turns in “My Fair Lady”.
Unemployed Americans, and others nervous about their futures, can be forgiven for being as unimpressed as the Chinese by the Clinton-Hormats-Geithner trio. They see little reason not to blame cheap Asian labor—the word “coolie” reappears now and then—for their troubles, especially when stories of the working conditions of Asian workers in iPhone and other factories hit the front pages of the papers. It is understandable that jobless workers conclude that these lower-paid workers, toiling in conditions unacceptable here, have displaced the better-paid Americans who were once the backbone of the aspirational middle class.
Never mind that the jobs market is improving. Last month the economy added 243,000 jobs, 257,000 in the private sector, dropping the unemployment rate to its lowest level in three years—to 8.3% from 8.5% last month and from 9.1% last August. Average hourly earnings also rose. Frosting on this cake is the report that earlier estimates of job creation in November and December were revised upward by 60,000. But close to 24 million Americans can’t find full-time work, and some 5.5 million have been out of work for 27 weeks or longer. They remain a core constituency for protectionism.
Free trade, too, has its advocates, and not only CEOs of big multinationals. America’s farmers are flourishing, in good part because exports of farm commodities are booming. The Distilled Spirits Council is trumpeting the virtues of the US-Korea Free Trade Agreement, which cut duties on whisky and bourbon imported by Korea’s drinking class, resulting in a 16.4 increase in US exports, largely of “super-premium” brands. Korea, along with China—yes, China—Brazil, India and other developing countries now account for a majority of American exports, which are soaring.
My own guess is that we are destined to hear a great deal of protectionist noise in the run-up to the election. But nothing much of real consequence will happen until after November. After all, why should trade issues be treated any differently from all of the other unattended problems we face?