Obama’s Turn in The Barrel

http://www.freep.com/apps/pbcs.dll/article?AID=/20080515/NEWS15/805150398&GID=b1RR8W6VRN+esZidgDU8myWp3AOt/dwkolUo6P3JR3s%3D

I’ve posted a number of articles critical of stances taken by John McCain.  Now it’s Obama’s turn.  The big news yesterday was Edwards’ high profile endorsement of Obama at a rally in Grand Rapids.  Getting less press, except here in the Detroit area, was Obama’s speech at a local Chrysler stamping plant.  So here’s some excerpts followed by my commentary:

Obama told more than 200 people at the meeting that he wants to invest billions to help the auto industry become more competitive.

He proposed a $150-billion federal investment over 10 years in the green economy, including incentives for the auto industry to develop more fuel-efficient cars; $1 billion a year to provide manufacturers with grants to convert to cleaner technologies; double the amount of federal money going into the Manufacturing Extension Partnership, to implement plant conversions, and $100 million a year for the Advanced Manufacturing Fund, which would invest in research and development of technological advances.

There’s been a lot of talk lately about “investing in green technology,” as though somehow the manufacturing of “green technology” equipment is immune to outsourcing and foreign competition.  We definitely need more investment in this area, but it will do absolutely nothing to address the trade deficit and the loss of manufacturing jobs. 

The only incentive the auto industry needs for developing more fuel efficient vehicles is a profit incentive.  They have to be able to make money selling their vehicles.  How much profit potential is there, how much incentive, to invest billions of dollars in new technology, only to have the door thrown open to every global manufacturer who wants a piece of the U.S. market but has nothing to offer in return?  How many of our cars will Japan and Korea commit to buying?  How many American made cars will be exported to China?  If the answer is few or none, as it has been for decades, then the only answer is to charge them a penalty, otherwise known as a tariff, for access to our market when they give us no equivalent access in return.  This is just common sense. 

These other ideas – a “Manufacturing Extension Partnership” and an “Advanced Manufacturing Fund” are high-minded sounding names designed to fool American manufacturing workers into believing that something substantive is planned for them. 

Come on, Senator Obama, I believe you’re better than this; you’re smarter than this.  You talk about “change.”  Where is the change in our trade policy?  Where will be the change in our trade picture?  Can you promise us that our trade deficit will change into a balance of trade or, dare I say the word – a trade surplus?  The time for trivial, meaningless measures is long past.  There’s no time to waste.  Our economy can’t endure year-in, year-out trade deficits approaching a trillion dollars a year.  Show us REAL CHANGE!!

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4 Responses to Obama’s Turn in The Barrel

  1. Henry Dubb says:

    Today stopped by Eye on Trade and it looks like McCain has come out in favor of punitive tariffs. Any thoughts?

    http://citizen.typepad.com/eyesontrade/2008/05/poll—nafta-an.html

  2. Pete Murphy says:

    Thanks for the heads up, Henry.

    All, here’s the relevant excerpt from the post that Henry’s referenced:

    “In other news, Sen. John McCain (R-Ariz.) has come out in favor of punitive tariffs on climate change laggards, but according to the NYT:

    In the prepared text of his speech, e-mailed to reporters on Sunday night and Monday morning, Mr. McCain went so far as to call for punitive tariffs against China and India if they evaded international standards on emissions, but he omitted the threat in his delivered remarks. Aides said he had decided to soften his language because he thought he could be misinterpreted as being opposed to free trade, a central tenet of his campaign and Republican orthodoxy.

    As we noted a couple of months ago, McCain’s (and Obama’s and Clinton’s) climate change policies are seriously limited by his beloved “free trade” deals.”

    It’s encouraging that McCain is willing to entertain the concept of tariffs for any reason, but it seems he doesn’t favor them as a mechanism for restoring a balance of trade. It’s fairly easy to predict what would happen in this scenario: China and India will agree to international climate change standards and then simply ignore them. If caught cheating, they’ll apologize profusely, promise to do better, and then continue to ignore them. This cycle would replay over and over and over.

    Still, if this report is true, it’s encouraging that any candidate would be willing to have their name and the word “tariff” included in the same sentence.

  3. Henry Dubb says:

    And to Bush’s credit, boy do I hate doing that, the tariff on hangers, in spite of NPR’s spin, has turned out good for US jobs.

    http://proletariat.wordpress.com/2008/05/08/tariffs-help-wi-business/

    Eye on Trade also had a piece on the TN Sen who won running on fair trade. It seems that in the end getting more of these guys elected will give more bang for the buck than those running for President.

  4. Pete Murphy says:

    Thanks for bringing this to my attention, Henry. I hadn’t even heard about this tariff. It’s obviously having exactly the impact that I would have predicted – breathing new life into the American manufacturers.

    People who complain that their dry-cleaning tab goes up a penny are forgetting that the increased demand for labor will help to drive up everyone’s wages along with it. It’ll definitely drive up wages in the vicinity of the hanger plants.

    Let’s hope that this little tariff example was a case of the government dipping its toe back into the tariff waters to see what happens.

    Thanks again. I plan to make this the subject of a post.

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