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Thursday, October 13, 2011

Cooperation on Capitol Hill

Democrats and Republicans came together on Capitol Hill to pass three free trade agreements being supported by the White House.  The Washington Post labeled it a win for the White House.  The nations involved included South Korea (the world's 15th-largest economy), Columbia and Panama.

These agreements were opposed by some labor unions.  As reported in the article:
Richard Trumka, president of the AFL-CIO, called the deals “lousy” in a speech in Washington this month.
On the other hand, the United Auto Workers and the United Food and Commercial Workers supported the agreements.

This is a must better direction than the 1930 Smoot-Hawley Tariff, which helped deepen the Great Depression.

Tennessee Senator Bob Corker, a member of the Banking, Housing and Urban Affairs Committee, wrote about trade wars and their bad outcomes in Wednesday's Wall Street Journal.  His final paragraph reads:
In 1930, Congress passed the Smoot-Hawley Tariff Act.  In a moment of populism, legislators reached for simple answers to complex problems.&nnbsp; The result was a deeper depression and a decade of increased joblessness. We must not repeat these mistakes.
There is no doubt that some lose jobs due to increased international trade, but some also gain jobs.  Economics tell us that both sides in trade agreements win.

UPDATE:  This just in from the U.S. Bureau of Economic Analysis (BEA):
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total August exports of $177.6 billion and imports of $223.2 billion resulted in a goods and services deficit of $45.6 billion, virtually unchanged from July, revised.
Increased trade would help balance the trade balance.  Note that the link is probably only good until the next such announcement, when the content will change.

Regards  —  Cliff

1 comment:

Anonymous said...

Agreements are is free trade. However, unless and until the US has something more that other nations are willing to buy at a price they are willing to pay....and until we make in the US things we buy from someone else...we will suffer from buying more than we sell.

It really IS that simple.

Cost of goods is killing us. I saw an article yesterday in which it was reported that Ford workers in the UAW have rejected a $6000+ bonus deal that they labeled "stingy." You have to be kidding!! But also pointed out that at Ford, these workers make an average of $56/hour. Over at Government Motors...the wages are considerably less and falling with each new iteration of contracts.

When will "labor" (organized and not) understand that their wages get folded in 100% to the cost of the goods being manufactured...or the service offered? The American labor competition isn't in the US. They are competing with every other country making the same stuff, and in the end, the buyer..the going to go with the lowest price for acceptable quality.