Jan 26, 2008

January 18, 2008: Stay of Execution (Health Care and Steel, We an't Give Up Our Jobs the Way We Should - Our Ancestors Were Never Such Fools)

Mitt Romney gained a reprieve last Tuesday. The stay of execution was administered in the good state of Michigan with a victory of nine percentage points over Marshall McCain, who hobbles south with a now bandaged foot, brandishing a now tarnished badge. This was a must-win situation and Romney knew it. Heralding his roots in Michigan and the auto industry, railing against intrusive government regulation, blaming Washington’s CAFÉ standards for the current predicament, and invoking the memory of his father, Mitt was able to prevail in this shootout with the Marshall from Tombstone.
Oh if it were only that easy: a mere trade off on global warming to keep those jobs. But this canard must not be allowed to stand, it is the kind of shameless nonsense that propelled Reagan to power and has since been the main course on the rubber chicken circuit. Actually had Washington enforced rather than relaxed the CAFÉ standards, had we compelled automakers to develop fuel efficient technology, had we followed Republican Senator Howard Baker’s advice and issued a “clarion call to reinvent the automobile”, we could have restored our global competitive edge. While foreign auto companies put money into research and development our domestic auto manufacturers put money into top notch legal firms and lobbyists to oppose any new regulations and to rid themselves of old ones. The result, as in the 1970s, is that we are once again well behind the curve as the industry adjusts globally to the changes in fuel prices and environmental concerns. And so Romney, ever reading yesterdays papers, tore a page from an old Reagan press release and made it his own. The problem is that we are a quarter of a century closer to a global catastrophe with little time now to spare.

A few weeks ago it was announced that Toyota sells more automobiles in the United States than Ford. This speaks not only to the lack of competitiveness, but of the results of decades long practice of allowing foreign imports to flood our domestic market. Clearly someone in the world will meet the demand for global surface transportation by way of automobiles and trucks. In our youth, this demand was largely met by American auto manufacturers. We have forfeited our advantage by allowing our domestic industry to languish; to buy it’s way out of upgrading and making itself more globally competitive; and by underwriting our foreign competitors by allowing them not only to infiltrate but to inundate our market.

The American industrial order is characterized by two salient facts: First we are the only industrialized country that does not have a clear, compelling and cogent economic policy. Instead we are left, in the words of economist John Kenneth Galbraith, to rely on “incantation, admonition and prayer”; kneeling in the church of “free trade” and genuflecting before the stock markets while imploring distant gods to save our collective ass. This has, predictably, led to incredibly stupid and ignorant policies of opening our borders to foreign goods that have gutted the old industrial base of what was once the “Arsenal of Democracy” and the wholesale flight of jobs and capital as those markets have been globalized. Secondly, we are the only industrialized country in the world that does not have socialized medicine. Ford regularly tells us that when figuring the cost of producing an automobile more is spent on health care than on steel. Ford, Chrysler and GM must compete in an international market that now not only favors foreign producers, because ‘ol two-cows’ has destroyed the value of the dollar in international markets, but they must also carry the additional burden of health care for their workers. Imagine the improvement in competitive advantage of what is now left of the old-line manufacturing sector—steel, autos—furniture—appliances—if these firms, like their international competitors, could be relieved of the burden of maintaining the cost of the health care of their workers and their families. Any Democrat now seeking the presidency should be busy about the business of lining up the executives of Ford, Chrysler, GM, General Dynamics, General Electric and many, many others and announce the nationalization of health care as a means of reclaiming our competitiveness and restoring America’s position as the greatest industrial and commercial power on earth.

“This place has changed for good
Your economic theory said it would
It’s hard for us to understand
We can’t give up our jobs the way we should
Our blood has stained the coal
We tunneled deep inside the nation’s soul
We matter more than pounds and pence
Your economic theories make no sense”----Sting, “We Work the Black Seam”

Let me repeat: there is no reason on earth why we should give up our auto industry— or any of our manufacturing base—to foreign competitors. We need to establish a clear and cogent and compelling national industrial policy. We will protect and foster our national industries. We will impose import duties on foreign products, we will subsidize those industries deemed critical to our national interests, and we will assume as a nation the cost of health care for the workforce. In exchange we will demand that the export of capital and jobs cease, that ownership by foreign nationals in any company under the aegis of protected industry be limited to less than twenty percent, and that the companies in question agree to meet the guidelines concerning environmental protection, worker wages and safety, and research and development targets in order to improve global competitiveness. If we can put a man on the moon we can certainly build automobiles and other durable goods in these United States.
In those areas where industries, such as the clothing industry, have fled wholesale, we must move to foster start-up projects and nurture them as we did in the past. Our ancestors were never such fools, they freely chose winners and losers in the marketplace; they never would have stood passively and watched the markets alone decide questions of such importance. They understood the need to protect and nurture domestic enterprise and so invoked the imposition of tariffs to protect everything from shoes to machine parts; they used land grants to build railroads, and price supports to save the family farm. By the middle of the twentieth century they had, by these means, built an economic engine that would not only dominate but feed the world.
Romney is, of course, not on the road to Damascus and is not likely to experience such an epiphany any time soon. He is, in fact, the very product of Wall Street, an investment impresario who made his billions by creating ever greater concentrations of wealth. He did not create the wealth; he was simply a parasite that created ever greater concentrations of it. He made himself rich doing it and it is not likely to see anything wrong with it, regardless of how much pain he witnessed walking through the boarded up main streets of Michigan. His answer: More of the same old bromides… But Romney, thanks to the good citizens of Michigan who last Tuesday exhibited more heart than sense, will live to fight another day…..it’s on to Nevada where his prospects are suddenly much brighter.

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