One of Jim WebbGÇÖs major economic planks is the statement that Free Trade Is Not Fair Trade. He has said many times that we need to level the playing field to halt the outsourcing of our good-paying jobs to overseas. The failure of the Republican leadership to protect not only American workers but American producers from foreign competition is exactly why America is breaking into three parts with a small, high-living elite at the top, a shrinking and increasingly impoverished middle class, and a growing underclass of the disadvantaged at the bottom. As it happens, it is not easy to explain the ins and outs of capital investment and the flow of international trade in TV-suitable sound bites, so there is some justification to complaints of GÇ£Sure, and what do you intend to do about it?GÇ¥ especially when the die-hard conservative opposition like George Allen keeps spouting mantras about the inevitability of globalizationGÇö very much the way Communists used to spout mantras about history being on their side and they would, as Krushchev said, GÇ£bury us.GÇ¥
The clearest and most succinct explanation of WebbGÇÖs position has turned up in a surprising place,
an editorial by Pat Buchanan in The American Conservative Magazine, not exactly a hotbed of liberal economics, and a publication sometimes to the right of The Wall Street Journal.
Mr. Buchanan notes that in July our trade deficit hit another all-time high of $68 billion (which means an annual rate of $816 billion). U. S. factories have continued closing at a high rate, we have lost at least 3 million jobs to overseas, and any real job creation here at home has been in low-paying areas like health care. Why are we GÇ£getting our clocks cleaned?GÇ¥
Answer: the other countries have rigged the rules of world trade. How? America imposes a corporate income tax whereas all our trade partners (read: rivals) use VAT, or Value Added Tax imposed at each stage of production. When the finished product is exported, the VAT is rebated to the manufacturer. When an American product is imported, an equivalent of the VAT is added on to the price of that product. This amounts to a foreign subsidy on exports to the U.S. and a foreign tax on imports from the U. S., so we get hit coming and going and cannot compete. Buchanan estimates that the total tax disadvantage to American producers is about $294 billion, plus a similar tax disadvantage levied on U. S. services of another $85 billion.
Buchanan ruthlessly cites three reasons our elite (Republican) leadership has put us in this untenable position: 1) Ignorance of how world trade works. 2) IdeologyGÇö as he says GÇ£these robotic free traders recoilGÇ¥ from any suggestions that imply any disadvantage in the working out of Adam SmithGÇÖs Free MarketsGÇÖ Invisible Hand (which he says they confuse with the hand of the Almighty). And, 3) GÇ£They are hauling water for transnational companiesGÇ¥ intent on moving their factories overseas and away from demanding American workers. How can we level the playing field?
Answer: impose an GÇ£equalizing feeGÇ¥ on imports equal to those VAT rebates, then take the billions so raised and cut taxes on U. S. companies, especially in production. According to Buchanan, our trade deficits would immediately shrink, and all those outsourced jobs and factories would begin to come home. Equalization in some form is one of WebbGÇÖs many programs. What I have not heard from anyone, though, is what unintended consequences might flow from a reduction in the trade deficitGÇö for example, on the sale of U.S. Treasuries abroad to finance that pesky deficit and our wars. But that is another story for another day. Meanwhile:
So not only is free trade not fair trade, it really isnGÇÖt even free, once you take a look at it. So much for George AllenGÇÖs blithe support of everything President Bush wants.
We can't even trust the budget and the budget deficit figures, primarily because the government does not use the system of accural accounting--- which, by the way, the government requires private companies to use.
You're quoting Buchanan and another conservative Paul Craig Roberts, part of the Reagan Administration, economist, writes articles almost daily blasting the current economic insanity.
Now these are conservatives and ya know what? They are just plain right, they are actually looking at the numbers.
What I would like to see the Webb campaign do is point out to conservatives that Webb is more of a true fiscal conservative than Allen could ever dream to be.
Allen is busy introducing bills about removing duties on Toasters and Coffee Makers! How obviously corrupt is that?
Only very specific items!
I understand that Webb should continue his positive ads, but if at all possible we should start hearing a few sound bites on policies, like the Free Trade is Not Fair Trade and how Allen and Bush are facilitating the looting of America (as well as Iraq), the pillaging of our Treasury, and the eventual debt slavery of our children and grandchildren.