U.S. Consumers Vs. Unions: Which Program for Congress?
by BRUCE KESLER
November 6, 2010
Two competing programs are proposed to Congress from the left and from America’s manufacturers. One protects domestic unions while further burdening US manufacturers and consumers. The other grows US competitiveness.
The Nation, in its inimical leftward way, analyzes the problems with 'free trade globalization.' Its National Affairs correspondent, William Greider, longtime journalist, describes “a huge hole in the world” a massive loss of demand. Think of the trade wars as the largest producers fighting over an abrupt shortage of buyers.
The situation, as Greider sees it:
A Wall Street Journal poll found that 53 percent (including 61 percent of Tea Party adherents) think free-trade globalization has hurt the US economy. Only 17 percent think it has helped. But the trouble with Americans claiming injured innocence is that it blinds them to the complexities of the predicament. The fact is, the United States and China, motivated by different but mutually reinforcing reasons, collaborated to create the unbalanced trading system. American multinationals eagerly sought access to China's market. The Chinese wanted factories and the modern technologies needed to develop a first-class industrial base. American companies agreed to the basic trade-off: China would let them in to make and sell stuff, and they would share technology and teach Chinese partners how it's done. Not coincidentally, US corporations also gained enormous bargaining power over workers back home by threatening to go abroad for cheaper labor if unions didn't give wage concessions.
Greider points out, correctly, that multinational corporations, clever devils, have profited from US subsidies but, anyways, shipped production overseas for less costly labor and regulation.
Greider’s prescription is to impose more regulation and taxes upon multinationals that ship production elsewhere. Greider does not even suggest that unions negotiate less costly labor contracts or that our government reduce its regulatory burdens upon domestic manufacturers.
Greider, finally, does admit that his recommendation “would raise prices for Americans.” US manufacturing unions, however, would - though still likely to hemorrhage jobs - keep high wages and benefits for their remaining members, and dues flowing for contributions to Democrat political campaigns.
By contrast, the National Association of Manufacturers just issued its Manufacturing Strategy for Jobs and a Competitive America. Some recommendations are clearly self-serving, like not taxing foreign earnings, but most make much more sense than Greider’s - get ready for this euphemism –“national loyalty program.”
· Taxes: A pro-manufacturing tax policy must first acknowledge that when Congress raises taxes, it makes manufacturers in the U.S. less competitive: Reduce the corporate tax rate to 25 percent or lower without imposing offsetting tax increases; Institute permanent lower tax rates for individuals and small businesses. Small businesses are responsible for the bulk of new jobs created in the United States.
· Tort Reform: Reject new federal regulations that dictate rigid work rules, wages and benefits and that introduce conflict into employer employee relations; Implement a common-sense, fair approach to legal reform. Provide clear standards for liability and justice for all parties, including specific statutes of limitations, sanctions on frivolous claims and limits on punitive damages. Preserve federal pre-emption for federally approved products in national commerce, preventing use of litigation in 50 state courts to function as de facto regulators; Oppose special-interest legislation that incentivizes and subsidizes litigation against manufacturers, such as tax deduction for contingency lawsuits.
· Regulation: Balance costs and benefits of regulation, preventing the imposition of regulatory burdens that are counterproductive or force businesses to close; Reject the Environmental Protection Agency's (EPA) efforts to exceed its authority when it seeks to establish national economic policy through greenhouse gas regulations. Resist expansion of the Federal Trade Commission’s (FTC) authority that would give the FTC broad new powers over nearly every sector of the U.S. economy.
· Innovation: Strengthen and make permanent the R&D tax credit; Innovation is served by robust funding for federal research agencies as well as financial support for public- and private-sector research; Recognize intellectual property (IP) as one of America’s competitive strengths that must be defended at all levels. Support enhanced efforts against counterfeiting; Attract the best talent from here in the United States and from the entire world: Support substantial increases in the number of employer-sponsored visas.
· International Trade: Promote progressive international trade policy that opens global markets, reduces regulatory and tariff barriers and reduces distortions due to currency exchange rates, ownership restrictions and various ‘national champion strategies.’; Assist and energize exporting by small and medium-sized manufacturing through expanded export promotion programs as well as export credit assistance for both small and large firms.
· Energy: Create a comprehensive energy strategy that embraces an “all of the above” approach to energy independence: Encourage production of baseload electricity - the dependable power that is critical to manufacturing processesincluding traditional (coal, hydropower and natural gas), nuclear and renewable and alternative fuels. Reduce dependence on foreign energy by increasing domestic supply; Establish federal climate change policies that reduce greenhouse gases while maintaining a competitive playing field. A comprehensive approach toward reducing greenhouse gas emissions is critical. A unilateral, U.S.-only approach toward this global issue could have a severe, anti-competitive effect on manufacturers in the U.S. and the entire economy.
· Infrastructure: Invest in infrastructure to help manufacturers in the United States more efficiently move people, products and ideas: Support innovations that include capital budgeting, private investment bonding, environmental permit streamlining and flexibility to the states as part of a comprehensive infrastructure strategy. The long-term reauthorization of surface transportation funding should be a priority for both immediate job creation and long-term competitiveness. Authorize, invest in and accelerate the development of a satellite-based Next Generation Air Transportation System. Encourage high-speed communications and innovation through broadband infrastructure investment.
· Education: Encourage innovation through education reform, improvement and accountability: Invest in science, technology, engineering and math (STEM) education. Manufacturing increasingly requires a skilled workforce able to build on strong fundamentals in math, science and analytical abilities to adapt to new technologies and rapidly changing manufacturing processes; Improve the quality of education in early childhood, primary, secondary and post secondary school systems. Promote a system of nationally portable, industry-recognized skills credentials; an approach that provides employers with the certainty that they are hiring a skilled technical workforce, at the same time providing expanded opportunities for workers regardless of whether they are new or transitioning to new careers.
· Health Costs: Contain the cost of health care by building upon the existing employer-sponsored health care system without jeopardizing or mandating plan design.
The report concludes:
The United States is the strongest, largest and most productive manufacturing economy in the world. But our competitors want to take our place, and their national governments dedicate themselves to this goal with resources and strategic planning. America must do better.
We want the United States to be the best place in the world to headquarter a business. The United States should be the best place to innovate and do the bulk of a company’s global research and development. And the United States should be a great place to manufacture for the North American market and to serve as an export platform for the global market.
The way of the left only digs the hole deeper, and then pulls the dirt in upon our heads. The way of US manufacturers, instead, strengthens the US competitive advantages.
FamilySecurityMatters.org Contributing Editor Bruce Kesler served in USMC Intelligence in Vietnam and was a researcher at the Foreign Policy Research Institute. He worked as a financial and business operations exec for Fortune 100 and small companies, and for the past two decades as an independent certified health and benefits consultant and broker. His columns have appeared in many major newspapers. He currently blogs at Maggie’s Farm.
