In his current Asian trip, President Obama visits Japan, then addresses a forum of leaders in Singapore, and eventually ends up in Seoul to discuss nukes and North Korea. But make no mistake, the axis of this week is the time Obama will spend in China, which has catapulted to the forefront of international affairs and is on its way to joining the United States as the alpha and omega of the global economic system.
That China has emerged is secret to no one, but the consequences haven't been fully integrated - either by the United States or by China. The level of intertwinement between the two economies has reached the point where they have effectively merged, forming what I've called an economic "superfusion." But that fusion hasn't yet altered political and cultural mindsets.
The ministers of the world still beseech the United States to "do something" about a weakening dollar, and U.S representatives on the eve of this trip announced that after the financial morass of the past 15 months, the United States "is back." Yes, the United States remains the world's largest economy - though technically the combined income of the European Union is greater. But size isn't everything - just look at Japan, which is still the world's second largest economy but whose influence and impact are substantially less. China may be poor on a per capita basis (perhaps $5000 per person relative to nearly $50,000 in the United States), but it is changing more rapidly and consuming more hungrily that any other society in the world. It is the change factor in the global system.
The American manufacturing industry and its employees are constantly told that they need to be better competitors in the global market, that they must increase the value they add. How are they doing on that?
Something that jumps out from data about the share of global manufacturing had by the United States, China and five other industrialized nations, is that the US is about even with China. As of 2008 and according to UN figures, China's manufacturing accounts for 17.3 percent of world output in dollars (though this number is slightly inflated), while the US' share is 17.7 percent. All else is rarely equal, so this is about as close as you'll get in the real world.
From a Bureau of Labor Statistics report described here, "By the end of 2006, China's manufacturing employment had increased once again to 112.63 million, nearly eight times the level of manufacturing employment in the United States (14.16 million)." The numbers have surely changed since then, but probably not by an order of magnitude.
Those figures could imply many things, but what they seem immediately to suggest is that American workers are extremely productive. They can produce both a high volume and high value of goods, and they have done so without getting a real raise since 1974.
Yet US manufacturing workers face higher unemployment rates than the national average, and often have to accept lower paying work when their plants close down, which should be no surprise. At the advice of the finance industry, wages and benefits have been driven down, policy makers were encouraged not to worry about the decline of the industrial base, and the whole thing was papered over with a massive consumer credit bubble.
For years, Americans have been fulminating about China and its policy toward currency. While many of the debates are technical and laden with econo-speak, they boil down to the simple conviction that China is unfairly manipulating its currency to keep it undervalued against the dollar. The result is to give China unfair advantages in trade - flooding the US with cheap goods, hurting labor wages world-wide, and accumulating massive surpluses in the process. That view is again articulated by Paul Krugman in today's New York Times (http://www.nytimes.com/2009/10/23/opinion/23krugman.html?ref=opinion) which ends with the firm statement: "Something must be done about China's currency."
The economic relationship between China and the United States is the defining issue of our day. While debates over health care are vital to American society, and while challenges ranging from Iran to Afghanistan to North Korea are real, nothing will determine the arc of the coming decades - or will shape domestic life and prosperity in the United States - more than the emergence of China as a global economic superpower unrivalled except by America.
The rise of China is hardly a secret, but because it is a complex economic that is constantly evolving, it gets less attention than hot-button issues. Absent a real crisis between the two, the relationship is more about the flow of capital and the nature of global business than it is about heated battles inside the Beltway or on Main Street. And while the rise of China and America's increased dependency on Chinese loans to fund its deficits certainly generates anxiety, it's mostly amorphous barring some specific issue to focus it.
How that relationship came to be is the subject of my new book, Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends On It. While this economic fusion has taken more than two decades to evolve, with the crisis of the past year, it has become both a tighter embrace and one more fraught with tension. It's to the credit of both governments - for now - that those tensions have not boiled over.
While Washington is glued to the drama over health care, over the past few days, Russian Prime Minister Vladimir Putin has been in Beijing meeting with Chinese leaders including Premier Wen Jiabao and President Hu Jintao. In a series of communiqués, they celebrated the "strategic partnership" between the two countries and charted a course of future close relations.
Among others things, Putin - Russia's man behind the curtain who has also been spending considerable time in front of the curtain - signed off on six billion dollars worth of trade deals Chinese counterparts, including moving ahead with a natural gas pipeline to open up the vast Chinese market to Russia's equally vast supply of natural gas. The two sides also discussed policies to contain and manage North Korea. Trade between the two countries is approaching $60 billion a year, and while that is a faction of the more than $300 billion a year between China and the United States, it is hardly negligible.
The New York State Senate and Assembly, too often a model of corruption and dysfunctionality, rose above petty politics last week to pass forward-thinking legislation on climate and energy, setting a precedent for bipartisanship and a sensible cap and trade system. The State Senate passed the groundbreaking Green Job/Green New York Act, with strong support from Republicans, Democrats, and the Working Families Party, which spearheaded the legislation. The bill -- expected to be signed into law this week by Gov. David Patterson leverages $112m in revenue from the Northeasts's Regional Greenhouse Gas Initiative (RGGI) into $5 billion of private investment to finance home weatherization, energy efficiency projects, and green jobs creation.
As the United States and China wrap up their two-day "Strategic and Economic Dialogue," it's more apparent than ever that the two find themselves in a marriage that neither can easily dissolve and that neither fully wants.
The speeches struck all the rights notes - "the United States and China share mutual interests," President Obama announced. "If we advance those interests through cooperation, our people will benefit, and the world will be better off - because our ability to partner with each other is a prerequisite for progress on many of the most pressing global challenges" Those sentiments were echoed by both Hillary Clinton and Timothy Geithner in an op-ed published in the Wall Street Journal. The Chinese delegation spoke of the two nations as traveling in the same ship, a ship which was wracked by the global financial storm of the past year. In general, the rhetoric could not have demonstrated more clearly that both see themselves as locked in a relationship of mutual dependence.
This seems like Framing and Political Strategy 101 to me, but since few other people are talking in this way, let me just lay out a basic idea: all this talk about doing a stimulus package versus not doing a stimulus package is fundamentally besides the point. What we need is a comprehensive policy package that is very simply focused on one thing and one thing only: jobs.
I know the policy wonks on Capitol Hill may be confused by that paragraph because, they would say, well, a stimulus program would create jobs. Well, yeah, that is the idea of stimulus. But my point is this: the politics of a second stimulus package are a dead end. The politics of having a debate about a policy package that will create jobs is a helpful thing. Announcing a second stimulus package gets Democrats into a defensive crouch about why the first one failed, and gets us into that same "can we get to 60" dance with Ben Nelson, Arlen Specter, Olympia Snowe, and Susan Collins that caused the first stimulus bill to be pared back and rendered less effective.
Voters don't know what it means to say you are going to stimulate the economy, but they do know what a job is. And right now, what we need is jobs sooner rather than later. My point here is not to just rename the stimulus bill the jobs bill. In fact, there are quite a few things the White House and Congress can do to focus on jobs that don't involve just spending more, although more money will certainly need to be spent. Here is what I would include in a comprehensive package:
Last week, Gallup reaffirmed what polls have been telling us for a few years now: Americans are sick and tired of rigged trade policies that they know are selling them out:
The most interesting thing about the poll, though, is not its numbers, but Gallup's analysis.
The pollsters note:
As with many policies, there are pluses and minuses to foreign trade. And while many economists and political leaders may hold a more pro- than anti-trade position, the public does not necessarily share that position. In fact, as the Obama administration seeks to preserve or expand current trade relationships, the public is slightly more likely to take a negative than a positive view of foreign trade.
As always, those who want to reform trade are billed as "anti-trade" - not, for instance, "pro-trade-reform." Anyone who thinks our current trade policies are bad must be portrayed as Luddite isolationists by the Establishment - it's standard operating propaganda.
But what's really interesting is Gallup highlighting the rootsgap - ie. the gap between the American public and elite opinion. Yes, Gallup couches it with mealy-mouthed terms like "not necessarily," but it's right there, and the more that rootsgap gets exposed, the better able we will be to narrow it.
The Wall Street Journal explains why "Buy America" provisions and domestic preferences will likely be integral to making sure the green energy revolution actually happens in our country - and isn't outsourced:
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.
Oddly, tax credits for domestic manufacturers - as opposed to Buy America laws - aren't portrayed as "protectionism" even though they are just as much a subsidy as targeted procurement policies. I'm not quite sure why that is.
Well, if you wanted a redux of the 2008 campaign in which John McCain criticized spending taxpayer money here at home, check this out from National Journal:
Defense contractors are among the leaders of a lobbying drive by American companies not singled out for direct aid in the economic stimulus package, pushing back hard against "Buy American" provisions...
Aides said Sen. John McCain, R-Ariz., plans to offer an amendment to the stimulus bill (HR 1) on the Senate floor this week that would strike the Buy American provisions.
In a letter to Senate leaders obtained by Congressional Quarterly, 100 companies and associations warned Tuesday that the provisions "will backfire on the United States." The letter, whose signatories include defense giants such as Lockheed Martin Corp., Northrop Grumman Corp. and United Technologies Corp.,
National elections should have consequences, and campaign promises in key swing states should be fulfilled. Call your senator and tell them to vote against the McCain amendment and stand up for Obama's campaign promises. As Businessweek's cover story indicates, U.S. taxpayer money needs to be spent on the U.S. economy if this stimulus bill has a chance to really lift our economy.
A top Obama economic adviser appeared to question the wisdom of placing a "Buy America" in the massive economic stimulus package winding its way through Congress.
Lawrence Summers, director of the White House National Economic Council, told regional reporters in a briefing at the Old Executive Office Building next to the White House today that the president is examining the provision in both the House-passed and Senate versions of the measure...
Summers added that Obama wants to ensure that the stimulus legislation is not an excuse for America to break existing trade commitments or embrace "any new kind of protectionism." Asked whether that mean Obama really does oppose the "Buy America" section, Summers told The Daily Briefing that he had already answered the question and wouldn't elaborate.
Let's just say you are among the very small minority of people in the world (most of whom were at Davos last week) who believes the whole concept of "protection" is bad, no matter what is being protected - kids, water, air, jobs, etc. Let's just stipulate that, and let's not have a debate about whether your fringe position is moral or just. Let's for a moment ignore the verifiable fact that every economy in the world including ours is protected. Let's even ignore the fact that supposed "free" trade agreements include all sorts of tariff protections for corporate profits (copyrights, patents, etc.) yet are still called "free" trade agreements, while anyone wanting to put minimal tariff protections for the environment or human rights in such agreements is slandered as a "protectionist." Let's just put all that aside for a minute and get to some basic definitions.
If you are one of those people who hates "protection," even you will admit that when it comes to economic policy debates, "protectionism" is a term that has been used for the better part of a century as the word to describe tariffs. Smoot-Hawley tariffs, for instance, were labeled "protectionist," and tariff proposals today have been labeled "protectionist."
But now, suddenly, every corporate lobbyist in Washington, D.C. is claiming that Buy America laws are "protectionist," even though they have absolutely nothing to do with protecting the economy through high tariffs. Buy America laws simply say that American taxpayer dollars - when spent specifically to stimulate the American economy - should be spent on American goods that are made with American labor. How is this "protectionism" in the way that word has been defined for the better part of a century?
The answer is that it's not in any way shape or form.* Indeed, the definition of the term "protectionism" is being changed by the corporate outsourcers that won't get a piece of the pie if Buy America laws are in the stimulus. Why? Because when even Businessweek says that without measures to make sure stimulus money stays in the country, the stimulus will be undermined, corporate outsourcers need to resort to trying to change the definitions of words in order to defend their profits.
* Tellingly, corporate lobbyists - when pressed on this point - resort to conjuring fantastical hypotheticals claiming that basic Buy America laws will prompt tariffs in other countries. But again, these are fantastical hypotheticals based on wild speculative fearmongering - and not rooted in anything resembling fundamental, dollars-and-cents reality. America's economy is the largest in the world, and the dirty little secret is that because of that reality, no country can afford to shut down access to our market, Buy America laws or not.
(AP) Banks collecting billions of dollars in federal bailout money sought government permission to bring thousands of foreign workers to the U.S. for high-paying jobs, according to an Associated Press review of visa applications. The dozen banks receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers...The figures are significant because they show that the bailed-out banks, being kept afloat with U.S. taxpayer money, actively sought to hire foreign workers instead of American workers.
As my book, The Uprising, showed in its examination of efforts to unionize high-tech workers, these companies use the H-1B program to hire workers who will take much lower wages and whose immigration status is effectively determined by their visa-holding employer (read: they can't try to unionize, etc.), thus undercutting American workers. In the case of the banking industry, while "lower wages" still certainly means decent wages, the bottom line is that the importation of foreign workers - at a time when domestic unemployment is rising - is a way to drive down the corporate bottom line. And now, that drive is being subsidized by the very taxpayers who it is hurting.
And yet, in the face of this, we're expected to believe that provisions ensuring taxpayer cash is used to hire American workers is somehow evil "protectionism," while letting taxpayer cash subsidize outsourcing is Enlightened Prgamatism. What a joke.
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...
Two very easy points that debunk this line of argument:
The development of a global corporate economy has further strengthened the executive branch and weakened the legislative. This process started long before the second Bush administration and cuts across political parties. It began in the 1980s, when the current globalization phase took off, and has continued since...
In fact, economic globalization has had its own autonomous effect in sharpening executive power and in weakening the legislature. This is separate from questions of national security and abuses of executive privilege. It will take more to stop this consolidation of power than having an administration that does not abuse its executive power and that would eliminate the Patriot Act, though this would certainly make a difference...
A new president genuinely willing to respect the balance of power and willing to cancel the Patriot Act will still be in a structural position of growing power in today’s liberal state. A hollowed-out Congress confined to domestic matters weakens the political capacity of citizens to demand accountability from an increasingly powerful and globally oriented executive. Today, the liberal state produces its own democratic deficit.
There is an ironic possibility in all of this. Can a president intent on fighting for a better and more just democracy actually use that expanded executive power to do this?
Also, for those of you interested in some good book recommendations, check out my essay on David Rothkopf, Ha-Joon Chang and Mark Engler's latest over at the Dissent website. The conclusion seems appropriate for this week of change:
THIS OCTOBER, the International Monetary Fund (IMF) and World Bank meetings came to Washington, and, as they do every year, an impassioned bunch of activists mounted protests, decrying the neoliberal agenda that has deregulated markets, pitted worker against worker, and devastated local communities and the environment.
The difference this time around was that, in the wake of the most significant financial meltdown of our times, the bankers were echoing the protestors’ calls for re-regulation. Indeed, as the number of people protesting the global institutions has shrunk since September 11, 2001, the mainstream acceptance of their basic critiques has swelled...
As economic conditions worsen, there will be a bevy of rich individuals and governments attempting to claim the reform mantle as their own. The WTO, IMF, and World Bank are already attempting to reposition themselves as the ideal brokers for solutions to the climate, finance, and food-price crises—despite their role in creating or exacerbating them. Decades of political marginalization have left too many progressives too timid to lay out their alternative visions in a meaningful policy form. If they fail to do so now, the current “told you so” moment will be sweet but short.
I wrote my diary "'Obama And Elitism' In George CostanzaLand" as an antidote/analysis of the ridiculous spin we're seeing about Obama's elitism from other hyper-elitists. But beneath all the spin, there are serious issues, as Robert Oak reminded me:
the meme
Obama is wrong, very wrong and so are many people on the blogs. Calling rural America gun toting fundamentalist, protectionist, isolationist, racist xenophobes is not how to win friends and influence people.
This theme of either you are for open borders or you are a racist xenophobe has been going on for a long time and yes this isn't the first time I've seen this sort of rhetoric and framing coming from Obama.
Somehow, people thinks it's perfectly ok to name call like this on the left and frankly it's not.
It's also not what is happening on the ground, in small town jobs and factories, in manufacturing jobs. Jobs are being offshore outsourced, China is a major economic and also a military threat and yes we have a biased trade treaty with China to move jobs offshore. Just look at the trade deficit to see the facts.
Look at the costs of illegal immigration and just how much wages have dropped in a series of occupational areas (meatpacking, construction, landscaping).
These economic issues are real. Worker displacement is real.
I get the feeling people who are blogging all have trust funds or somehow identify with affluence and have never even driven through the rust belt, or gone to Detroit or even talked to local workers as they go about their errands never mind have ever lived in a blue collar area or in rural America.
The issue isn't bitter, or frustrated, the issue is Obama does not have any policy positions that will truly rebuild our manufacturing base, stop the flow of illegal labor, not endorse the corporate controlled global migration agenda, take on China both in trade and military agenda and truly support and raise up the American people.
Take for example NAFTA. Obama does not have any policy to really renegotiate trade agreements. Worker and Environmental standards will not
stop labor arbitrage through these trade agreements. The tariff schedule from China alone ensures that. Adding insult to injury by name calling these people just solidifies some philosophy that all
of these very real issues, with real statistics, real data proving they are real, Obama is going to ignore because somehow it goes against some personal philosophy....the facts that is.
What I find amazing is how so many people are so out of touch, they cannot even realize what the insult in those statements is.
Close your computers and open your eyes. Volunteer for Barry Welsh (IN-6th) and get out there and talk to people in an area that has truly been decimating by much of their complaints. Listen to these people and realize what they are saying is valid. The complaints from rural America are real, these are real economic issues and has nothing to do with some sort of perceived cultural identity as is being assumed.
They don't trust the candidates because Candidates are not offering solutions which address these issues and put US workers first, simple as that.
I thought Robert was missing something in the dynamic of the moment, which was important for the point I was trying to make in the diary. But ultimately, the whole point of the sort of analysis I was doing was to fight systematic obscurantism, and, ultimately, to refocus attention on things that actually matter. And since Robert's comment did precisely that... well, why not make that the subject of a diary?
"One of our greatest assets we have in Afghanistan today, frankly, are our Canadian friends," he said. "It's very controversial in Canada, their commitment and the suffering and the losses they have faced. And we need, we need our Canadian friends and we need their continued support in Afghanistan.
"So what do we do? The two Democrat candidates for president say that they're going to unilaterally, they're going to unilaterally abrogate the North American Free Trade Agreement. Our biggest trading partner, they're going -- who we made a solemn agreement with -- they're gonna unilaterally abrogate that. Now, how do you think the Canadian people are going to react to that -- who we are having now their enormous and invaluable assistance in Afghanistan and we're going to abrogate a free trade agreement?"
I mocked McCain for making such a bizarre statement, but I am starting to think that, like with Bush's seemingly strange Dred Scott comment, there is a hidden meaning to it. Consider McCain's statement in the context of conservative Canadian Prime Minster Stephen Harper responding to allegations from New Democratic leader Jack Layton that Harper is interfering the Democratic primary against Barack Obama:
Here is Harper's response to the allegations (transcript mine):
The Canadian embassy in Washington has issued a statement indicating its regret at the fact that information has come out that would imply that Mr.--Senator Obama has been saying different things in public than in private.
So, the Canadian conservative prime minister is calling Barack Obama two-faced on NAFTA at the exact same moment that John McCain is indicating that Canada might pull out its troops on Afghanistan if we make too much a stink about NAFTA? That strikes me as more than a little suspicious. In fact, it strikes me as a directly coordinated attack by McCain and Harper to neutralize McCain on trade during the general election. It wouldn't be the first time Harper and Republican leaders have coordinated, given that Harper uses Republican pollsters and the conservative movements in both countries are deeply intertwined. Further, in addition to making Obama look like a two-face panderer who will anger key international allies, this attack serves a triple purpose of weakening Obama by extending the Democratic primary, which might (I emphasize might) further weaken Obama in the general election. Other conservatives, such as Rush Limbaugh, are already pushing supporters to vote for Clinton for exactly this same reason.
I generally agree with Josh Marshall on this one: the whole thing stinks of cross-border conservative coordination on the presidential campaign. The plus side is that not only is what Harper doing probably unpopular in Canada, but that in the general election Obama can probably appear with opposition leaders like Layton or Stephanie Dion to reinforce his position on the issue. That way, not only does Obama's position gain credibility, but his victory might even bring down the Canadian conservative government.
"One of our greatest assets we have in Afghanistan today, frankly, are our Canadian friends," he said. "It's very controversial in Canada, their commitment and the suffering and the losses they have faced. And we need, we need our Canadian friends and we need their continued support in Afghanistan.
"So what do we do? The two Democrat candidates for president say that they're going to unilaterally, they're going to unilaterally abrogate the North American Free Trade Agreement. Our biggest trading partner, they're going -- who we made a solemn agreement with -- they're gonna unilaterally abrogate that. Now, how do you think the Canadian people are going to react to that -- who we are having now their enormous and invaluable assistance in Afghanistan and we're going to abrogate a free trade agreement?"
"I want to tell you right now I believe in free trade," McCain added.
This is hilariously bad attack from McCain. It is the sort of thing that makes me eager for the general election.
First, he ties every single issue into foreign policy, demonstrating a complete lack of concern for domestic affairs. It reminds me of a Saturday Night Live joke from late 1991. On Weekend Update, Kevin Neelin said something like 'Today, Pat Buchanan unveiled his 'America First' Campaign for the Republican nomination. In response, President Bush unveiled his 'America: When I Have The Time' campaign." NAFTA is somehow about maintaining troops levels in Afghanistan? McCain's one track mind and distaste for domestic affairs strikes me as a huge opening to exploit.
Second, talk about a tin ear on trade. Even talking about reforming NAFTA is somehow bad? While a plurality of Americans think NAFTA has been, on the whole, a good thing, less than a quarter think that it should not be reformed. But hey, if McCain wants to pin himself in an unpopular corner on trade, by all means, go for it.
Third, is McCain seriously raising the threat of pissing off Canada? I'm pretty sure that Canadians have pretty much the exactly same opinion of NAFTA as do Americans, and thus talking about reforming NAFTA won't anger them at all. Also, I know it isn't very progressive to say this, but even if this talk did anger Canada, most Americans probably don't care. The threat of Canada picking up its ball and going home because they don't like the tone of our voice is not going to resonate with many people here.
Fourth, McCain is just wrong on the face of it. He even had to sort of retract, and when he did he gave this garbled response:
"Maybe they're not saying they'd, quote, abrogate. They are saying radically restructure," he said. "The point is not whether I want to renegotiate any terms. The point is whether you want to renegotiate or unilaterally announce that you are going to take certain action whether the Canadians happen to agree with it or not."
Huh? I'd say that this was inaccurate, but I'm not even entirely sure what distinction McCain is drawing here. Democrats are bad for unilaterally announcing that they want to radically restructure the deal, when the right approach is to say that you want to renegotiate? What does that even mean? And how does a group of people unilaterally announce anything?
Wow--it is moments like these that make me pretty happy McCain is the nominee. There are a ton of holes to drive through here, and I guess it is simply a matter of Democrats choosing which hole at which they should aim the truck.
(A wee reality-based look at trade issues, beyond the soundbite level. - promoted by Paul Rosenberg)
You are probably aware of David Sirota writing piece after piece smearing Hillary on trade. I have commented repeatedly that these blog posts do not give detailed real position statements, mislead via Hillary's role as 1st spouse, and I find objectionable for they are not the whole truth, which is neither candidate has really adopted a strategy to completely revamp trade policy, especially Obama.
So, let's get to the truth shall we on Hillary's trade policy positions.
Hillary's website is god awful. There it is, I said it. So, it's harder to refute these claims because the position statements are not all in one place. I dig out many for you on the flip.
Last week, 
The 
In the 