Feeble signs of press concern about free trade policies

Could it be that the press is becoming aware of the perils posed by U.S. trade policies? Maybe, but don’t count on any follow-up.

“Six Reasons for U.S. to Abandon Free-Trade Myth” is the title of a column by Ian Fletcher published in the October 25 issue of Bloomberg Business Week. Fletcher, author of “Free Trade Doesn’t Work” and an adjunct fellow at the U.S. Business and Industry Council, advocates imposing U.S. compensatory tariffs on imports subsidized by currency manipulation, a move recently passed by the House of Representation.

The conservative business writer, Robert J. Samuelson, is especially troubled by our one-sided trade relations with China. The title of his September 27 op-ed column in the Washington Post summarizes his position; “Standing up to China: A trade war may be the lesser of two evils.” He charges that China “has never genuinely accepted the basic rules governing the world economy.”

Even the New York Times, that staunch defender of free trade, is sounding an alarm, as in an August 16 editorial, “Return of the Killer Trade Deficit.” It describes the “very dangerous habits” of China, as well as Germany, but limits itself to lecturing them to spend more at home and abroad. America should slow national spending and save more. The Times fears a trade war, as if China hasn’t been waging one for years.

So the press mood may be shifting, but not enough to help prevent the United States from committing economic suicide.

For some background, read my blog item of January 2, “Economic suicide is not an option.”

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A Must-Read for President Obama: families face more insecurity

Economic insecurity appears more the rule than the exception for American families, and that trend has worsened in the last few years. So says a new study, “Economic Security Index,” just published by the Rockefeller Foundation.

Other highlights of the study, covering the period of 1985-2007, include:

-- The majority of Americans had no safety net of savings.
-- Economic insecurity has risen across all demographic groups in America, with African-Americans faring the worst of all.
-- About 28,000,000 Americans were economically insecure in 1985. They numbered 46,000,000 in 2007.
-- The rising prevalence of two-earner families does not appear to have provided a big income cushion to families, because of rising prices, especially for health care.
-- Projections to 2009 suggest that in the last few years the level of economic security experienced by Americans was greater than any other time over the past quarter century.

The July report is part of an effort to develop a coherent measure of economic insecurity, called the Economic Security Index (ESI), based on the joint occurrence of three major risks to economic well-being: 1) a major loss in income; 2) large out-of-pocket medical expenses; and 3) inadequate savings to buffer the first two risks.

The ESI, as defined in the 24-page July report, will be updated on a regular basis to include new data and specific risks not covered. It is designed to provide hard data to policymakers.

I learned of this study from a New York Times op-ed column by Bob Herbert. Though technically “opinion,” the July 17 column has more facts than you’ll find in news reported by some parts of the media. Read more!

Looking at the economic world as it really is

“Real-world” economists now have a whole Weblog of their own. They have just launched it at http://rwer.wordpress.com with a series of articles that look at the economic world as it really is.

There you’ll find answers to questions mostly ignored by U.S. media. For example:

-- What country in Latin America is expected to have record economic growth this year even though it ignored the advice of the IMF and the U.S. business press?

-- Why are the investment rules in the pending U.S.-Colombia free trade agreement “dangerous, outdated, and out of touch with most of the [non-U.S.] trade agreements in the world”?

The first article is by Mark Weisbrot, co-director of the Center for Economic and Policy Research; the second, by Kevin P. Gallagher, professor of international relations at Boston University..

The new Real-World Economics Review blog replaces the Website of the same name, which is an outgrowth of the “Post-Autistic Economics” movement, the pioneer in re-thinking conventional economics.

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Obama faces crucial test on trade

Should the U.S. government impose tariffs on the China-made tires that are flooding the U.S. market? That’s just the immediate question that President Obama must decide in the next few days.

But the larger question is: Should he begin to reverse a trade policy that, day after day, is bleeding more and more American jobs and enfeebling the American economy?

The President has the legal power to restrict imports under certain conditions. Congress insisted on that restriction – and China agreed to it -- as a critical component of legislation approving China’s joining the World Trade Organization in 2001: the U.S. can put up a barrier against a flood of imports that damaged domestic business.

President Bush rejected every petition – four in all – to enforce that restriction. The tire petition is the first one to reach President Obama.

It was approved in July bv the U.S. agency that reviews such petitions, the International Trade Commission (ITC). The ITC found that the American tire market had indeed been disrupted by a surge of Chinese products, and by a 4-2 vote recommended approval of the petition, brought by the United Steelworkers in April. The deadline for Obama’s decision is September 17.

At stake is more than whether the People’s Republic of China should be permitted to export an unrestricted number of tires into the United States – 46,000,000 of them last year, valued at $1.700,000,000 – whatever the cost to the American tire industry.

In his September 2 Washington Post column, Harold Meyerson spelled out some broader implications of an Obama decision not to enforce U.S. trade policy:

“Why would anyone concerned about American jobs believe such provisions in future trade agreements? Why would U.S. manufacturers maintain their domestic production if they know that none of the legal protections they’ve been promised will ever be invoked?”

The even bigger question: will President Obama show that the U.S. government will no longer be a party to dismantling the economy of the United States?

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