That's heady rhetoric, indeed. The silver-haired, well-spoken author of Exporting America even lardered his testimony with references to the Federal Reserve System and dropped the names of economic giants Adam Smith and David Ricardo. His was a seeming tour deforce.
The only lingering question is--Does Dobbs' rhetoric square with reality?
In the court of economic opinion, some jury members vote no. Take Donald Luskin of the investment-firm Trend Macrolytics LLC. Whereas Dobbs had testified that American had "earned less on investments abroad than foreigners earned on their investments in the United States [for the first time] since 1946," Luskin counterpunched with a hard fact. "According to the Department of Commerce's Bureau of Economic Analysis," Luskin said, "in 2006 the United States earned $57 billion more from investing abroad than all other nations earned by investing here." Which led Luskin to label Dobbs' presentation as "[a] cavalcade of error and statistical misinterpretation."
OK, enough Dobbs-bashing. (And don't attribute my gibing him as jealousy. My hair is just as nice, and nowhere near as silver.) The point is that all of us must resist the lure of overblown rhetoric regarding trade policy. Politicians--first cousins of today's TV news personalities--sense a general, if ephemeral, disapproval of liberal trade policies. And before Election '08, they're ready to make the "facts" fit the perception. In the long run, though, such pandering will only hurt America in the global market.
From this corner a year ago, I showcased the thinking of Caterpillar's Jim Owens, who champions a free-trade policy grounded in mutual success as well as genuine protection. As the keynote speaker at National Manufacturing Week 2006, Owens declared that "Caterpillar is thriving today, not because we survived globalism, but because we embraced it."
Federal Reserve Chairman Ben S. Bernanke recently echoed Owens' thoughts. While acknowledging that "expansion of trade or changes in trading patterns can indeed destroy specific jobs," Bemanke said trade can also create jobs in a "labor market [that] exhibits a phenomenal capacity for creative destruction." In short, new jobs arise from changed market conditions.
"Another substantial benefit of trade," Bemanke said, "is the effect it tends to have on the productivity of domestic firms and on the quality of their output. By creating a global market, trade enhances competition, which weeds out the most inefficient firms and induces others to improve their products and to produce more efficiently. The U.S. manufacturing sector, which is perhaps the sector most exposed to international competition, has achieved truly remarkable increases in its productivity in the past decade or so."
That's the real story on trade, without the rhetoric.
Joseph F. McKenna
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|Title Annotation:||first cut|
|Author:||McKenna, Joseph F.|
|Publication:||Tooling & Production|
|Date:||Jul 1, 2007|
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