Some fact checking (4.00 / 3)

Lastest blog post from Public citizen, quoting EPI:

Multinational companies such as General Electric and Caterpillar, and their allies in the Chamber of Commerce, are attacking "Buy American" provisions included in the economic recovery bill passed by the House on January 28th. They claim that these provisions will provoke a "trade war" with foreign governments, but foreign governments have long histories of supporting their own domestic companies. These companies are self-interested, simply wanting unlimited access to imports, many of which are illegally subsidized and unfairly traded... Companies like Caterpillar, which will benefit from billions of dollars of infrastructure spending in the stimulus package, want unfettered access to cheap steel from countries like China, which poured more than $15 billion into energy subsidies into that sector in 2007 alone. Chinese steel imports more than doubled between January and November, while U.S. steel production fell nearly 40%.

In spite of you hearing on massive Catepiller layoffs, a call out on their real motivations:

it's worth noting now that companies like Caterpillar, who are arguing strenuously against these provisions, have moved much production overseas.

Economist Tonelson:

The counter-attack against Buy American proposals clearly is underway.  There are lots of reasons to worry about this campaign to beat back measures to require high U.S. content standards in all U.S. government stimulus programs and other measures to support American business (like the auto rescue package).

After all, the counter-attack is coming from the exact same interests that have benefitted hugely from outsourcing and the global economic crisis it produced by hollowing out domestic manufacturing and the rest of the U.S. economy's wealth-creating sector.

Despite these disastrous results, these folks still have massive resources at their disposal. They're still major players in economic policymaking circles despite the Democratic party takeover of Washington.  And of course, their views still dominate mainstream media coverage of these issues.

Now in terms of trade treaties, the WTO, I am by no means an expert and I hope Lori Wallach, the AFL-CIO etc. weigh in, but as I understand the GPA requirements, the only question is Steel.  that idiotic, very stupid document, which sorry, the Clinton administration signed...says one cannot limit goods on government procurement to domestic producers...

uh, that said, obviously every other nation on Earth has a work around....except the United States.  (Thanks MNCs...
we so appreciate what you have added to the United States!)

Then, it's all a matter of vehicle.  One can give "incentives" to buy US steel and there are thousands of examples of subsidies by other countries to various raw materials as well as manufacturing.

One huge problem is China as EE status (emerging economy), which is obviously absurd since they just exceeded Germany and are well on their way to be the world's dominate economy...

But EE status are playing by a different "rule book" than "1st world" economies (uh, how can Germany be 1st world and China EE when China's economy has exceeded the size of Germanys?  When India is ranked right up with China in terms of PPP/normalization via the OECD?)

But I know VAT (value added tax) is legal under the WTO and EU, pretty much every other nation on Earth, ...except the United States,  has a VAT and this is how they redirect purchase, support for their various national economic interests.

So, claiming some bogus trade war?  I think it's all bluff and fluff.  The corporate lobbyists are trying to generate a scare tactic non-issue to keep their global labor arbitrage, offshore outsourcing agenda intact.

Honestly, I wonder what Caterpillar would say if perhaps the United States gave an incentive to many some other heavy equipment manufacturer for the required large capital expenditures needed for infrastructure projects...
who knows, perhaps an incentive to create a FCDC (foreign controlled domestic corporation) in say....Peoria Illinois?

NoSlaves.com  


The Economic Populist

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by: Robert Oak @ Sat Jan 31, 2009 at 15:32:53 PM CST

on the auto rescue -- "General Motors to Invest $1 Billion in Brazil -- Money to Come from U.S. Rescue Program" (0.00 / 0)

http://www.laht.com/article.as...

General Motors plans to invest $1 billion in Brazil to avoid the kind of problems the U.S. automaker is facing in its home market, said the beleaguered car maker.

According to the president of GM Brazil-Mercosur, Jaime Ardila, the funding will come from the package of financial aid that the manufacturer will receive from the U.S. government and will be used to "complete the renovation of the line of products up to 2012."

"It wouldn't be logical to withdraw the investment from where we're growing, and our goal is to protect investments in emerging markets," he said in a statement published by the business daily Gazeta Mercantil.
...

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by: amberglow @ Sat Jan 31, 2009 at 16:11:56 PM CST

[ Parent ]

right (4.00 / 1)

I actually wrote up a story  on EP awhile ago and we had someone claiming they represent GM denying it.

Check the comments for more details.  EP also has an advanced search but numerous posts on the offshore outsourcing, including advanced R&D.  

I live over on EP, that's our blog/site but I like openleft plus EP is pure econ...so I run over here to comment.

NoSlaves.com  


The Economic Populist

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by: Robert Oak @ Sat Jan 31, 2009 at 16:35:28 PM CST

[ Parent ]

Motley Fool ran this news too -- aren't they reliable? (0.00 / 0)

http://caps.fool.com/blogs/vie...

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by: amberglow @ Sun Feb 01, 2009 at 14:30:05 PM CST

[ Parent ]

What the eff has the VAT to do with it? (0.00 / 0)

If a nation has a VAT, all goods are subject to it, no matter if imported or domestically produced. The VAT isn't used for protectionist measures, and it would be very apparent if it would be missused for such nonsense. So, what is your point at all???

If you think, a national VAT would improve the financeing of the administration (it does, but at the cost of reducing domestic sales), stomp for implementing it, fine. But this would have no effect at all on the balance between imported and domestically produced goods.  

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by: Gray @ Sun Feb 01, 2009 at 11:41:38 AM CST

[ Parent ]

the "green" energy stuff too -- (4.00 / 1)

http://online.wsj.com/article/... --

Congress is beginning to fear that the Obama administration's push for renewable energy will produce more jobs in Asia and Europe -- where most wind turbines and solar panels are made -- than in the U.S.

The proposed remedy is a provision in the economic-stimulus bill that offers tax breaks to U.S. producers of the equipment.

Sen. Jeff Bingaman (D., N.M.), chairman of the Energy and Natural Resources Committee, is urging support for a provision in the Senate version giving a 30% tax credit to companies that expand or build U.S. manufacturing facilities geared to renewable energy, clean transportation or electric-system upgrades.

"Several of us have come to recognize that we've outsourced the very things we're going to need to change the nation's energy mix, and this is a way of encouraging more manufacturing here at home," Mr. Bingaman said.

The situation highlights a weak link in U.S. industrial policy: Although tax credits are offered to those building renewable-energy projects, there are no comparable incentives for domestic equipment makers. That could undermine President Barack Obama's goal of fostering job creation through adoption of renewable-energy and so-called green technologies -- a key component of his economic-recovery plan. ...

A recent study by the Renewable Energy Policy Project in Washington, D.C., found that each megawatt of wind capacity installed in the U.S. creates 4.85 full-time jobs, of which 3.4 come from making components -- which is done mostly outside the U.S. The remainder come from such services as installation and maintenance. ...

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by: amberglow @ Sat Jan 31, 2009 at 15:40:40 PM CST

WTF? (0.00 / 0)

How do you know Obama is going to retract something his own drafters put in at the first draft?? you first should give credit to summers and co for putting this provision in this bill in the fist place. second the report you linked was only speculation and no direct evidence from obama Admin that the prov is being repealed.

You and Mike's post (about tarp) are unfounded (for now) and hysterical without any solid facts from Obama admin themselves.

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by: Burry @ Sat Jan 31, 2009 at 15:41:16 PM CST

he didn't put it in at all -- it was amendments inserted by Congress -- (4.00 / 3)

not Obama.

as of now there's nothing requiring that jobs be created here or that any of the funding be spent here or that domestic materials be used, etc -- except for these amendments that are gonna be killed for sure.

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by: amberglow @ Sat Jan 31, 2009 at 16:07:37 PM CST

[ Parent ]

unrelated (4.00 / 2)

Burry, please stop troll rating people you disagree with.  "0" is not short hand for "you are wrong" it is a means to eliminate actual trolls.

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by: Daniel De Groot @ Sat Jan 31, 2009 at 16:37:39 PM CST

[ Parent ]

economic patriotism (4.00 / 2)

Dude, com'on. This argument is so silly. If the government can get a better value for their money from buying from foreign firms, why would we want them paying more for "American" made products? Proponents of government spending should take special care to insure that government tax dollars are used as efficiently as possible.

In a global economy, even the definition of what is American made is subject to debate. The plant is in the US? The corporate headquarters? The majority of shareholders? What about the sub-contracters and makers of individual components? What percentage of the good needs to be manufactured in the US for it to be considered American made?

Furthermore, the current global economic crisis is affecting all nations, developing and developed alike, and we shouldn't be concerned with spillover effects of government spending. If anything we should be encouraging other nations to similarly invest in stimulating their economies through spending that isn't limited to domestic companies. This way efficient, market-leading companies benefit and government isn't distorting markets by choosing companies to reward based on political considerations.  

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by: Max Berger @ Sat Jan 31, 2009 at 17:39:39 PM CST

Why? (4.00 / 1)

First of all - read the Businessweek story in this article. If the government pays slightly higher prices for products in the United States, that has an economic echo effect far beyond the slightly higher price. If you buy an American made good, you aren't just spending the money on the good - the money stays in the country in the form of wages, etc.

Secondly, the Buy America law in question has provisions in it allowing the president to wave it if the cost of the good in question is more than 25% higher than what can be bought from companies that, say, use slave labor in the developing world to make their goods more cheaply.

This is your lesson in Economics 101.

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by: David Sirota @ Sat Jan 31, 2009 at 19:11:42 PM CST

[ Parent ]

Ojer Governemnts won't simply set by and let the US get way with protectionism (0.00 / 0)

Canada, Mexico, the EU nations, Japan, and many important trade partners are very concerned about this move, and won't simply sit on the sideline if this crap passes. Of course, they'll retaliate! The US export economy just got a boost from the weak dollar, and numbers were improving. Do you want to crush this by provoking tolls on iPhones, Caterpillar machines and Chrysler 300s?

Economics teaches us that free trade between nations has a positive effect on those economies. Competition advances technology, and improves efficiency. Of course, it has to be a fair trade, if one side has an advantage because of lower wage standards, less secure production, and an artificially low exchange course, you shouldn't tolerate this. But while this may be a problem with trading with China, it certainly isn't one with the western industrialized nations, who are prodcing conditions very similar to those in the US. And consequently, afaik, none of those nations hs a "buy our own goods" clause in their emergency plans. And there have been trade wars with the US in the past, and a one sided action by the US could easily trigger one again.

Don't forget that even though the world is happy about the new president, everybody is suffereing under the recession, and everybody knows that the damn Yankees started it. Nobody would accept if US rescue packet bucks would be exlusively reserved for US products, while a the same time the American export industry would profit from the packages of other nations. Retaliatory measures against the US would be an easy sell to the population. So, it's not a smart move to negligently start such a war. You would end up in splendid economic isolation.

This is your lesson in Economics 201.  

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by: Gray @ Sun Feb 01, 2009 at 11:34:30 AM CST

[ Parent ]

France & Germany right now are protecting THEIR auto industries -- they ALL do it -- (0.00 / 0)

... France and Germany, the twin economic engines of continental Europe, will not let their auto industries flounder amid the financial meltdown and economic crisis, French President Nicolas Sarkozy said Monday.

Sarkozy and German Chancellor Angela Merkel said they agreed during talks that coordinated action was key to addressing the economic downturn, even if different measures were used by Paris or Berlin.

"We want to react with speed and with force to relaunch the economy" in a manner appropriate to each country but coordinated, ...

He noted that in France the auto industry, including dealerships, involves 10 percent of the working population.

...

-- http://www.iht.com/articles/20...

France Dangles EU6 Billion in Auto Aid, Wants Plant Commitments  -- http://www.bloomberg.com/apps/...

...rance extended more credit to PSA Peugeot Citroen and Renault SA and said aid to the carmakers may reach 6 billion euros ($7.8 billion) in return for their pledges to keep domestic plants open.

"Our efforts for carmakers will be massive," Prime Minister Francois Fillon told an industry conference today in Paris. In return for aid totaling 5 billion euros to 6 billion euros, the government wants the carmakers to give "exemplary commitments" to keep production in France and help their struggling suppliers, he said.  ...

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by: amberglow @ Sun Feb 01, 2009 at 14:35:23 PM CST

[ Parent ]

Jst like the US. Even before the bailout, there was the R&D bill, remember? (0.00 / 0)

US car manufacturers already got a multibillion deal from congress to research and develop new energy saving cars. So, the US provided the precendent.

However, there are is no discussion about implementing "buy French" or "buy German" rules. Totally to the contrary, Germany just establishe a new law that gives German customers a rebate of 2500 Euros if they buy a new car and give their old one away to a certified salvage yard that will recycle the materials. This isn't coupled to a provision to "buy German", you will get the rebate if you buy a Chrysler 300, too. So, both the US and Europe support their manufacturers in this crisis, but only the US is considering to get rid of free trade.  

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by: Gray @ Sun Feb 01, 2009 at 14:50:57 PM CST

[ Parent ]

Public Financing of Campaigns (0.00 / 0)

is the only solution to this corporate whoredom

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by: jr1 @ Sat Jan 31, 2009 at 18:09:18 PM CST