Congress is about to take up a bill that would grant the president authority to negotiate a trade agreement called TPP. The rhetoric on both sides has become heated, and misrepresentations are being tossed out by both sides. The truth is the TPP will neither be the end of the world nor the panacea the two sides are claiming.
The debate over Fast Track has put the North American Trade Agreement (NAFTA) in the spotlight again. Critics rightfully claim that NAFTA was a bad deal and it led to the flight of union jobs to Mexico. American truckers, including Teamsters, have suffered because Mexican truckers are now allowed to deliver Mexican goods to the U.S.
A great deal has been made about our $472 billion trade deficit. Many people blame it on past trade deals like NAFTA. However, NAFTA is not the biggest cause of the trade deficit nor is it the major reason millions of manufacturing jobs left the United States. Blaming NAFTA for the huge trade deficit and loss of 4 million American jobs is like blaming the Vermouth in your Martini for making you drunk.
NAFTA accounts for only 18% of the trade deficit and most of that is due to the imports of oil. Our deficit with Canada is only $31 billion. Canada is our largest trading partner and they bought $306 billion in American-made goods in 2014. Our trade deficit with Mexico was $54 billion in 2014. But, we exported $226 billion worth of American-made goods to Mexico. The deficit was caused by billions of oil we imported, not goods that were previously made in the United States.
The real culprit is China, which accounts for 40 percent of the total deficit at $318 billion; Japan adds another $73 billion; Germany is next at $67 billion. Our deficit with Saudi Arabia and Venezuela equals the deficit with Mexico, and it almost entirely due to oil imports. So, as for contributions to the trade deficit, our thirst for oil and appetite for gas guzzling SUVs and cheap goods are the real reason for the trade deficit.
To be brutally honest, blaming trade agreements for the loss of 4 million manufacturing jobs and huge trade deficits is not only inaccurate, it is dishonest. Americans have only themselves to blame for the loss of jobs, stagnation of wages, and trade deficits. Brutal as that sounds, it is the truth.
The reason for the decline of the middle class and stagnation of wages is that Americans elect politicians who have pass laws that encourage outsourcing and reward the companies that do it. They have enacted laws that tax the middle class while the wealthiest escape taxes all together. Americans politicians have enacted anti-union legislation from coast to coast including right to work laws and restraints on organizing.
Americans themselves have decided that unions are a relic of the past and they resist efforts to organize a union in their workplace. The result of the decline of unions since 1980 has been lower wages, fewer raises, loss of benefits, more bankruptcies, and longer hours.
The main reason for the hemorrhage of jobs and trade deficits is the choices made by American consumers. Our thirst for foreign oil is behind much of the trade deficits. Our unrequited appetite for foreign-made electronics, foreign cars, and cheap foreign goods is really the reason American jobs are gone. Businesses exist for one reason—profit. If it were not profitable to make things in places like China, India, Bangladesh, and Vietnam, corporations would not do it.
In the early 1980s when Reagan began dismantling unions and rewarding outsourcing, Americans still had a choice. They could buy American-made appliances; American-made TVs and computers; American-made steel. Consumers chose the Japanese models. Even union members continue to buy foreign cars. Go to the parking lot at a Ford or GM plant and you will find Toyotas, Hondas, BMWs, and other foreign cars.
ABC News did a series called Made in America a few years ago. They chose five families that allowed them to remove everything in their homes not made in the USA. All five houses were nearly bare. ABC then replaced all the items with products made in America. Almost everything could be found here, but usually at a higher cost.
Americans ourselves are the reason jobs are gone. When given a choice, we pick foreign cars, Japanese electronics, Mexican beer, French wine, Italian suits, foreign cheese, and everything made in China. No trade deal will fix that. Killing all trade deals will not fix that. Only Americans ourselves can fix it, and we show no inclination to do so. We like it the way it is.
If only part of the outrage and passion on both sides of Fast Track were directed at changing our tax laws or our buying habits, we could fix our economy and save the middle class. As long as we are distracted by bogymen, we will never address the elephant in the room—ourselves.
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