Earlier this summer, I noted that Obama faced a key test on his trade policies. Would he follow the protectionist rhetoric of his campaign, or govern more like President Clinton, who helped usher in NAFTA?
One such test is coming up, according to the Washington Post:
By Sept. 17, Obama must decide whether to slap a 55 percent tariff on tires imported from China, as recommended by a federal trade panel, or leave the matter alone, as a phalanx of lobbyists representing manufacturers in China and U.S. companies that import from them are urging.
I love how the Post frames the issue: A "federal trade panel" recommends a protectionist measure, while only a "phalanx of lobbyists" supports free trade. Of course, the tariff is also supported by a different "phalanx of lobbyists", the United Steelworkers union, but the Post doesn't give them the sinister treatment.
The rest of the article profiles some workers laid off from a Cooper Tire plant in Georgia:
"They would have these meetings and say we're up against the Chinese," said Larry Burkes, 29, who worked at the plant, which rises on the city's outskirts just beyond a mobile-home park. "We'd hear it all the time: 'They work for less.' There was pressure." Now the plant that employed 2,100 people in this small south Georgia city is being shut down, and the troubles afflicting the U.S. tire industry are at the core of what many consider to be one of President Obama's first major decisions on trade policy.
It's no comfort to the workers laid off in Georgia, but the jobs they just lost only existed in the first place because of free trade...within the United States. Cooper Tire is based in Findlay, Ohio, part of the Midwestern "rust belt". For decades, rust belt manufacturing companies like Cooper Tire opened new plants in southern states like Georgia, rather than just in their home states, because labor was cheaper down south. If free trade between Ohio and Georgia is good, it’s also good between Georgia and China.
Free trade brings consumers better products at lower prices, which makes everyone wealthier, and creates new jobs. The downside is that some workers lose jobs when their profession no longer enjoys a comparative advantage in the global market. But the answer isn't to harm almost everyone by fighting this natural process; the answer is to reduce barriers that block the transition to new professions that are in demand.
In the end, the "phalanx of lobbyists", as the Post calls them, have it right:
[The phalanx of lobbyists] argue that the ability to import the cheapest tires from overseas enables U.S. manufacturers to focus on producing more expensive tires, which have a larger profit margin. Most major U.S. tire manufacturers have tire plants in China or import from there.
"When you are one of the guys who loses a job in the process, I know that's cold comfort -- but it's also a reality," said Marguerite Trossevin, who represents a coalition of U.S. tire companies that import Chinese tires to sell under their brands.
- Pre-October 2009
This Week's Show -- July 3, 2014
DOOM AND GLOOM MEDIA: The media tell you about problems-like poverty, climate change, an energy "crisis." But "The Rational Optimist" Author Matt Ridley says "actually, things have been getting better, much better."
LIFE GETS BETTER: Author Robert Bryce says most everything today is "Smaller Faster Lighter Denser Cheaper."
FREE MARKETS: Vox.com writer Zack Beauchamp understands things are better. He says, "markets are a big part of the story... because they spark innovation." But he's also a lefty who believes is plenty of government regulation. I'll push him on that...
FRACKING FEARS: Is fracking dangerous? People tell us it is. My state has banned it. But FrackNation creator Ann Mcelhinney says fracking is "a marvelous thing" and "we need more of it, not less."
MEDICAL MARVELS: Today is one of the most exciting times in history for technology and medicine. Cardiologist Dr. Kevin Campbell explains that doctors now can provide things for patients, like 3D Printer produced organs, that we never imagined were possible.
HOW FAR WE'VE COME: Chris Cheng is a gay and Asian male-a twofer in terms of historic discrimination. But now he works with the NRA and makes speeches about guns. That almost certainly would not have happened in the "good old days."
MY TAKE: Politicians will destroy our future if they continue to ban innovation with regulation. But despite our irresponsible politicians, life has gotten better. Google will inform us about most anything within seconds. Facebook, Instagram, Skype, and email allow us to share all kinds of things. And all of it's free. If innovators can just keep creating new things faster than politicians and regulators can kill them, our future will indeed be the good NEW days.
9PM ET on Fox Business Network