"It's the trade deficit, Stupid."
Maybe if people walked around with signs and T-shirts with that slogan, rather than railing against the federal budget deficit, the American worker wouldn't be in quite the fix he's in.
More people need to be mad that America is a sucker when it comes to global trade. Our trading partners ignore the rules handicapping our industries, and we just take it — even as millions of Americans have lost jobs because of it.
But use the words "trade deficit" in a column and readers tend to move on. Add numbers, such as that America's non-oil goods trade deficit in 2009 was $283 billion, and it's almost sleep-inducing. This impenetrability is why the trade deficit has been allowed to create such a mess for the American worker.
It has been 15 years since the establishment of the World Trade Organization, and Americans should be asking: What has globalization bought us?
Chamber of Commerce types will crow that trade is a driver of economic growth and job creation. But as U.S. exports add jobs, imports destroy them. Because our trade deficit is huge — even considering a drop due to the recession — it is a job-destroying machine, resulting in the closure of tens of thousands of U.S. manufacturing plants. The myth that these jobs have been replaced by high-tech jobs is just that, a myth. High-tech jobs are being lost as well.
The numbers are stark. In 2007 alone, 5.6 million jobs were lost or displaced because of the non-oil trade deficit, most of those in manufacturing, according to international economist Robert Scott of the Economic Policy Institute.
One significant reason for the trade imbalance is that we don't require others to play by the rules. Countries such as China, Taiwan and Singapore engage in currency manipulation, a form of rule-breaking protectionism, without consequence.
Initially, Treasury Secretary Timothy Geithner seemed willing to deal seriously with China's obstruction to trade. But in April, Geithner delayed the release of the Treasury Department's semiannual report on currency manipulation.
Scott says we've been "hiding the elephant in the room for half a dozen years," by refusing to confront China on its manipulation. He says that if we ended this protectionism, "we could add 1 (million) to 1.5 million jobs in the next couple of years to the American economy with 60 percent in manufacturing."
China does other stuff, too, to keep a healthy trade imbalance in its favor. China only lets certain kinds of imports into its country, allowing things like raw materials, scrap metal and electronic components while barring most American-made consumer goods. It wants material to use in manufacturing but doesn't want Chinese consumers to have access to our finished products.
You might remember that the Obama administration got mildly tough with China last year, slapping a tariff on tire imports after the United States lost 5,000 tire-industry jobs over the previous five years, while the volume of tires from China tripled. China was outraged, of course.
Why do we put up with this? Partly to mollify China, with whom we need to cooperate in dealing with North Korea and Iran. Partly because the status quo makes Wall Street happy. But Obama made a campaign promise to "crack down" on unfair trade practices that harm our workers. With examples aplenty, let's start crackin'.