democratic economic shenanigans

democrats being hipocritical? who woulda ever thought....


Smoot Operators
The Democrats embrace the policies that brought us the Depression.

BY PETE DU PONT
Monday, March 22, 2004 12:01 a.m. EST

The cruelest economic tragedy of modern times was the Great Depression, a disaster deepened and accelerated by the Smoot-Hawley Tariffs of 1930. They raised import duties to the highest level in American history, igniting a global trade war. In three years U.S. exports to Europe declined to $784 million from $2.3 billion, and U.S. imports from Europe declined to $390 million from $1.3 billion. Global international trade fell by 66%.

Three-quarters of a century later the liberals' campaign drumbeat is to return to the wrongheaded policies of yesteryear that destroyed jobs and devastated the economy. Former Democratic presidential candidate John Edwards is a protectionist zealot, and the designated nominee, John Kerry, is a sympathizer. Protectionism is the gospel of labor unions, the Democratic Party, and about half the Republicans in the U.S. Senate, who voted for a protectionist amendment to forbid the awarding of federal government contracts to companies that outsource any of the work overseas.





But international trade is a good thing. It creates jobs rather than destroying them. Along with market economies (as opposed to government regulation and price controls), lower taxes and democratic elections, trade creates opportunity. If you don't agree, here are some questions to consider.
Since it went into effect in 1993 the North American Free Trade Agreement has created one million new jobs in America. Trade with Mexico increased to $220 billion in 2002 from $79 billion in 1993. Democrats argue that similar trade agreements with other nations should be revised or forbidden; are they right?

President Bush's steel tariffs saved the jobs of 5000 U.S. steel workers, but caused higher steel prices that eliminated 23,000 jobs in steel-consuming industries. Should similar tariffs be imposed on other product imports?

Radiologists in India can analyze patient X-rays at one-fourth of the cost of radiologists in the United States, and they are using U.S. computers, data chips and software to do it. Should such 'outsourcing' of medical technology be forbidden and some American X-ray health care costs increased by a factor of four?

New York Times columnist William Safire argues that imported shoes at $24 a pair give low-income Americans a chance to buy leather shoes they cannot afford at U.S. prices of $50. Would it be better to limit the import of lower-cost foreign shoes to protect American shoe manufacturers?

Sen. Kerry's home state of Massachusetts has 221,000 'in-sourced' jobs from European and Asian companies--Nestle, Novartis Biomedical, Honda, etc. Should the CEOs of those companies be required by their governments to shut their American plants and bring those jobs home to Europe and Japan? And should the CEO of the H.J. Heinz Corporation--Mrs. Kerry's family business--be required to close the 57 plants it is operating in foreign nations (compared with 22 in America) and bring those jobs home?

Gov. Joseph Kernan of Indiana cancelled a $15 million contract with an India company to upgrade his state's unemployment computer system, restructuring it so that it can be bid upon by Indiana and other companies. If the local companies' bids are higher than $15 million, would you load additional taxes on the citizens of Indiana, or reduce spending for schools, hospitals or police to pay the increased costs? Or would you go ahead with the original Indian company contract?

To offer a personal example, as governor of Delaware I twice vetoed 'Buy American Steel' bills. I believed that Delaware construction companies should buy the quality of steel needed for the job at the lowest possible price. Was I wrong? Should the state have required higher-priced steel for its bridges and buildings because it was made in America?

And a final absurdity: A bill before the Pennsylvania Legislature would ban state aid or government contracts to any company that has 100 jobs or more outside the United States. So, among other things, Pennsylvania hospitals, prisons and vending machines in state buildings would not be able to buy soup from Heinz or colas from Coke or Pepsi.





The trouble with protectionism, aside from its costs to the consumer, is that other nations retaliate: If America forbids the import of their goods and services into America, they will not permit export of American products to their countries. That would be costly because one factory job in five in America depends on international trade.
U.S. exports supported 12 million American jobs in the 1990s while foreign-owned firms directly employed 6.4 million American workers--Honda's 13,000 jobs in Ohio and BMW's 4,300 in South Carolina, for example. Why would we want to adopt protectionist policies that put all these jobs and people and good products at risk? If Messrs. Kerry and Edwards become Smoot and Hawley, a spiraling economic and employment decline will be the result; America will go backwards.

The truth is that market economies are in constant flux. Job opportunities change with time and technology. In the '30s farmers' jobs were one quarter of the American economy; today they are one-fortieth. Productivity is up, food prices are down, and fewer people work on farms. Is this a bad thing?

Horse-drawn carriages were replaced by cars, typewriters by computers, and E-ZPass has no doubt replaced some toll-taking highway jobs, all good things although a lot of jobs disappeared as new ones were created. The gales of creative destruction that shape market economies created 18 million new jobs in America in the past 10 years. But the important thing to understand is how that total was reached: 339 million old jobs disappeared while an astounding 357 million new ones were created in their place.

Democratic capitalism--market economies and free trade--has been the world's most successful economic system. To suggest that it be replaced by government regulated protectionism is, well, just plain stupid.

Mr. du Pont, a former governor of Delaware, is policy chairman of the Dallas-based National Center for Policy Analysis. His column appears once a month











-you think you can take us on... you and your cronies-