Posted on 06/10/2004 2:16:21 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
Lost in the flood of Ronald Reagan retrospectives and testimonials is a crucial fact with special relevance for all Americans today: To a great extent, Ronald Reagan was a trade realist.
The conventional wisdom about Reagan as free enterprise, free market champion is largely true. But on trade policy, Reagan acted decisively in five instances to save major American industries from predatory foreign competition. Moreover, as I detailed in a 1994 article in Foreign Affairs, in each case, the temporary import relief succeeded spectacularly, resulting in improved performance by these industries and avoiding the captive market prices that conventional economics teaches will always flow from restricting foreign competition.
Reagan's best-known protective policy was a tariff placed in 1983 on imported motorcycles at the request of American icon Harley-Davidson. The tariffs were to last five years, but the company's comeback proceeded so quickly that it relinquished the final months of import relief. Moreover, the tariffs encouraged Japanese rivals like Honda and Kawasaki to build or expand factories in the United States and create still more jobs for American workers.
Yet in many ways, the Harley tariffs were the least important examples of Reagan's trade realism. Far more significant and beneficial for the U.S. economy were Reagan trade policies that helped revitalize the auto, machine tool, semiconductor, and steel industries.
Reagan's tactics were flexible. In autos, machine tools, and steel, his administration subjected foreign producers to so-called voluntary export restraints. In semiconductors, Reagan officials negotiated an agreement to secure a specific share of the Japanese market for U.S. companies, and then imposed tariffs on Japanese electronics imports when Tokyo briefly refused to keep a promise to halt semiconductor dumping.
Reagan's results, however, uniformly clashed with conventional economic theory, which holds that protected industries always become fat and lazy price gougers. All four of the industries protected saw their productivity rise vigorously. All four improved quality so dramatically that they won back market share at home and abroad. All four boosted capital and R & D spending. All four held the line and then some on prices. And all four excelled largely because the import relief enabled them to attract the investment needed to retool. After all, why would capital markets steer money towards industries that seemed doomed to succumb to foreign mercantilism?
In addition, like the Harley-Davidson tariffs, the steel and auto trade restrictions drew Japanese, German, and Korean investment into the United States. Not only were jobs created; in the case of steel, cutting-edge technology was transferred to joint ventures with American partners set up in the United States.
Reagan was a trade realist in another vital sense -- understanding the need for carefully regulating trade with current and prospective adversaries. Indeed, soon after his inauguration, Reagan became convinced that the Soviet Union had run into a series of potentially crippling economic problems, and he implemented a policy of strategic denial that undoubtedly played a role in hastening communism's demise.
Reagan also recognized that, although preserving a system of multilateral controls is essential, U.S. leadership is also essential to keep those controls strong. Accepting the lowest common denominator -- especially from shortsighted allied governments out to make a quick buck -- just wasn't an acceptable option to him.
Reagan's trade policies were far from perfect. For example, he never systematically confronted Japanese, Korean, or European protectionism, apparently convinced that U.S. allies would in some way defect from the free world if he pressed them too hard on economics. He permitted the U.S. dollar to remain far too strong for far too long, and consequently did much needless damage to the U.S. industrial base by the time he approved a major devaluation in late 1985.
Nonetheless, when major American industries were on the ropes, a combination of national security fears, electoral concerns, and outrage at inequitable, illegal competition prompted Reagan to act, and American manufacturing was unquestionably the stronger for it. Tragically, this is a crucial aspect of his legacy that all three of Reagan's White House successors have rejected, frittering away American manufacturing and jobs in one ill-advised free trade agreement after another.
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
ping
Radio address to the nation on international trade, March 12, 1988
Reagan's best-known protective policy was a tariff placed in 1983 on imported motorcycles at the request of American icon Harley-Davidson. "
Reagan, the last Conservative President, was for conserving American industry and jobs. No wonder his supporters included Reagan Democrats.
marking
Unlike the current administration, Ronald Reagan had the integrity to pursue trade agreements without compromising American interests in a fair and level playing field. That is what enabled his landslide elections with the support of blue collar labor. Papa Bush rejected the Gipper's leadership on this issue, and got his bottom spanked when Perot entered the political fray.
If you think Ronald Reagan would have supported policies that saw China gifted with our nuclear, missile and MIRV technology, you must have had him mistaken with someone else. If you think he would have okayed a plan that financed China's assendency to a world class military power, you must have him confused with say, Bill Clinton, Ted Kennedy or even John Kerry.
Nope, I think he would have bought off on some of it, but he would have drawn the line watching our jobs go offshore, and our long term security subjegated to no holds barred insanity.
You know Willie, here on this forum we're supposed to favor the policies of Ronald Reagan. His policies saw the largest peacetime expansion in our nation's history. What cracks me up, are these wise sages who stumble across the forum saying that the same policies that saw the explosion of business in the 80s, couldn't possibly create jobs and expanded business today. Nope, we've had to turn the policies concerning our jobs market, our manufacturing and our oursourcing on their ear. Evidently these people hated Reagan's policies. I never realized how much.
Yeah, they sure did.
That's why I included the archive link to the Cato Institute's criticism of Reagan policies.
Now that the Gipper's gone, the neocon libertarian free traitors are trying to usurp his legacy.
But that Cato article is documentation of what they really thought of him.
Thanks for the good work Willie.
LOL, where in the world would you get that idea. I never said anything like that. But by all accounts, Reagan considered himself a free trader although he did protect several companies.
No surprise that the Cato bunch hates him--as does Friedman (noted in the WashTimes article I posted on the same topic.)
One wonders if Cato has a patriotic soul in the whole friggin' building--given the results of their 'praxis,' one can't help but ask the question.
BTW, as an added thought, I'm sure that you remember that there were TWO demographic groups that were largely credited with Reagan's landslide victories. One was the blue collar workforce that I previously mentioned (breaking the 'Rat's traditional stranglehold on labor). The other was the Christian Coalition. "Big Tent" neocons have managed to marginalize both. Labor was easy to demonize by simply resorting to union bashing rhetoric, even though organized labor representation of the blue collar workforce is in severe decline. The 'Rats have never recaptured this constituency, preferring to pander to government workers, health care workers, teacher unions and eco-extremists.
The Christian Coalition wasn't so easy to demonize, so the neocons pushed their agenda to the backburner as being "too divisive".
It's not surprising, considering that neocons ARE fundamentally liberal infiltrators.
No wait, Reagan was a protectionist! /openbordersfreetrade
The current GOP leadership doesn't appear to have remembered.
Surely you must agree, then, that George W. Bush is a protectionist. Don't you remember the Ag bill and the steel tariffs? [chuckle]
Ronald Reagan first proposed a free trade agreement between the U.S. and Mexico in his 1980 presidential campaign.
_____
Read and weep.
Exactly rude, you've now painted yourself into a corner where you are for free trade and everyone else is a protectionist. Enjoy.
Gosh, you are thick.
Thanks for the disingenuous end run on the issues at hand. Typical tactic of those who support this trade fiasco whether it gives nukes to the middle east or not. We've given China much, and it continues to spread that tech first and second hand. No problem right? Gag me...
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.