Skip to comments.A Real Jobs Solution
Posted on 06/22/2009 5:57:47 PM PDT by Kaslin
Free Trade: With unemployment at 9.4% and worse on the way, there's no doubt the economy's hurting. If the White House and Congress are serious about ending job destruction, they must open up new markets.
Obama's appointment of Ron Kirk as U.S. Trade Representative shows he's coming around. Kirk, a free-trader, has reached out to Korea, Colombia and Panama, allies who've been waiting three years for Congress to approve trade deals.
Opening Korea's market alone will create a market for American goods as big as that of Mexico, our third-largest trading partner. The jobs that follow from that would be in the millions.
That's attention-grabbing because recent data look so ugly.
Forty-eight out of 50 states and the District of Columbia lost 345,000 jobs in May, adding to the 5.7 million lost since December 2007. Michigan's jobless rate hit 14.1%, California's 11.5%, Oregon's 12.4%, South Carolina's 12.1%, Illinois' 10.6% and Indiana's 10.2%. Some 20,000 people have lost their jobs each day in 2009.
Moody's Economy.com economist Mark Zandi estimates the U.S. must create 150,000 new jobs each month just to break even.
(Excerpt) Read more at ibdeditorials.com ...
Where’s the barf alert? ‘Opening up new markets’ is just a way of saying let’s buy from them and run a trade deficit costing us more jobs.
If we want to create jobs, let’s look at all our trade agreements and insist on balanced trade - we buy product from you, you buy product from us.
I agree. More “free trade,” Ponzi schemes,...er, bailouts and bigger spending (to keep the importers’ wives and daughters in government offices), while us peasants continue to refuse to buy much at all. We’ll be better off after the big defaults. ;-)
Oh, boy. Now they are exaggerating like Obama. Where is the data to support this? Millions? Not at all likely.
If we really wanted to create jobs we would do four simple things:
1. Reduce corporate tax rates immediately. A 25% drop would be a good start - less tax at the corporate level means more cash for the payroll plain and simple.
2. Reduce / ensure permanent reductions in capital gains taxes. Punishing the reward part of the risk / reward equation is not only counter productive, but in effect a massive friction that bleeds wealth from job creation the same way friction steals energy from a process.
3. Freeze any new environmental requirements that are not directly and specifically associated with a specific or highly probably harm. The existing requirements provide a level of protection not seen virtually anywhere else on the planet. Let's at least pause on making it more economically infeasible for manufactureres to operate in this nation until there is at least a modicum of parity with our "trading partners."
4. Develop our energy resources. Seems simple but is hamstrung at every step of the process. Don't want our wealth flowing out - get the fricking obstacles out of the way to use our own vast energy resources and keep that wealth here to create new jobs.
I'm not an economist so maybe these ideas are off the wall. Just seems to me that we are doing everything in our power to cut the legs out from under our economy...
Has it occurred to you that crippling the economy might be the very objective of the exercise?
This administration seems to believe that "power flows from a crisis". In that case, "more power flows from a bigger crisis".
they want jobs?....coulda fooled me...they want us crawlingon our knees begging for Federal Scraps...of food, healthcare...
simple. No Capital gains taxes. No IRS. Deregulate.
“Bamster’s going to be the most notable of American presidents...either the last...OR the greatest....the latter will require him making Reagan look like a liberal.
Unfortunately - yes.
A carbon tax, or a carbon cap, is like the cherry on top in my opinion.
No representative - looking out for the good of this Nation, would would ever place a standard of living and productivity tax on its people. And that is exactly what any type of carbon regulation would be.
The only way to meet that draconion proposal is to substantially reduce our standard of living or reset our productivity - via decimating the economy - to a much lower level.
I have no misperceptions that the climate modelers will reduce their "carbon footprint" to help the cause...
We have a President and an Administration (and a Congress, for that matter) that is at war with the concept of American prosperity and American exceptionalism.
These people -- our elected leaders -- want the country to fail!
The Democrats had rather rule in hell than live in heaven. The Republicans are satisified at either place as long as they are the Democrat’s whipping boys.
New markets for what exactly? What do we have that the South Koreans want?
Well, there’s nukes, true, but I don’t think we’re shipping a truckload of nukes over anytime soon.
So what are S. Korean import trends?
Well, here’s a nifty graph:
And their GDP, annualized:
One of the cherished nostrums of the Great Depression is that trade collapsed as a result of the Smoot-Hawley Act, and trade restrictions imposed as quid-pro-quo by other nations.
In this downturn, we’ve only begun to see the faintest bits of trade restriction so far (but make no mistake - they are beginning). And what do we see?
World trade has collapsed more rapidly today than in the day and age where we had Smoot-Hawley.
NB “Figure 3.”
Somehow, I don’t think that “free trade” is going to reverse that worldwide trend just now.
But let’s assume that it will. I’m ready to play devil’s advocate.
Given the trade imbalance between S. Korea and the US (which in 2008 and prior years was running about $13 billion dollars in the Korea’s favor), we have to figure out what $13 billion in products the Koreans are going to buy from the US to simply erase the deficit.
OK, let’s say we do that. I suppose there are products, especially raw commodities such as foodstuffs that could take a big piece of the $13.4 trade deficit off.
But the editorial claims that we could “open a market at least as large as Mexico’s...”
According to the US Census figures on trade, exports in 2008 to Mexico were $151.2 Billion. That means they’re claiming that we’re going to quadruple our exports to Korea.
Hmmm. Don’t think so. Not possible unless they put on a huge spurt of GDP growth, which, as I look at it, won’t happen until the US consumer starts spending again. Korea, you see, has a very large dependency upon the US consumer spending - and the US consumer is contracting his/her spending just now. Somehow, we have to magically create jobs to help the US consumer buy more Korean products so they can buy more of ours....
Right. Someone will doubtless get back to me on just how we’re supposed to do that.
BTW — I mentioned our trade deficit with Korea was about $13.4 Billion above. What is our trade deficit with Mexico, the nation that the IBD wishes Korean trade could emulate?
Oh yea... they fail to mention that. We have a $64.7B trade deficit with Mexico. Just what we need as we’re running a huge current account deficit due to China and oil imports: an even BIGGER current account deficit!
Yea, that’s the ticket!
BTW — for those who would like to grind down on trade details, here’s the Census web site:
When you look at state-by-state exports to Korea, you see a lot of foodstuffs, raw commodities and metals. These industries are certainly important, but they don’t employ a whole lot of people in the US. That’s the trouble with our “service based economy.”
And it is the reason why I tell kids to go into a business that makes “stuff you can hit with a stick.”
and quit trying to close down or interfere with old markets. Even though cap and trade isn't law yet, the uncertainty has to be dampening the economy.