"There is always a philosophy for lack of courage."—Albert Camus

Monday, November 01, 2004

Send this to an undecided voter in OHIO

A Washington Times ran article (Oct. 17), “Angry Ohioans Ask Kerry to Stop Outsourcing,” noted that “polls show than an overwhelming majority of Ohioans blame the North American Free Trade Agreement (NAFTA) for their lost jobs.” China also comes in for a lot of blame. Assuming those polls are right, many Ohioans are badly misinformed.

The notion that NAFTA caused unemployment in Ohio has bee repeatedly retold by Rep. Marci Kaptur of Toledo, since NAFTA was enacted in 1993. Yet unemployment in Ohio was cut in half during the first 8 years of NAFTA, falling from 7 percent in January 1993 to 4.4 percent two years later, then to 3.6 percent by March 2001.

Mexico accounted for nearly 11 percent of our imported merchandise last year, but some $15 billion of that was oil. Mexico accounted for a larger 13.7 percent share of U.S. exports. Canada accounted for a much larger 17.6 percent of U.S. imports, yet Canada’s unemployment rate is 7.1 percent, obviously higher than Ohio.

The notion that Ohio lost jobs to China is also widely believed in Ohio’s steel towns. Yet U.S. exports of steel mill products to China last year exceeded $442 million. China’s growing demand also greatly increased the price of steel, much to the benefit of midwestern steel companies. China imported 43 million metric tons of steel last year – and exported very little.

China accounted for only 12.1 percent of U.S. imports last year, because the goods China sells here are visible but cheap. Before we bought shirts and gadgets from China, we bought them from Japan and others. “While imports attributable to China increased from 5 percent in 1992 to 12 percent in 2003,” notes the Congressional Budget Office, “the share of imports from other Pacific Rim countries declined from 34 percent to 21 percent.”

More than half our imports are industrial supplies and equipment (such as parts for Honda of Ohio). That partly explains why real U.S. imports rose 13.1 percent in 2000, when industry was doing well (until August), then fell 2.6 percent in the recession and terrorist attack of 2001. If imports caused job loss, we would have lost jobs in 2000 and gained them in 2001.

China had more than 98 million manufacturing jobs in 1995 (Asian Development Bank), but only 89.6 million by 2003. In every other major economy mechanical modernization is likewise having the same effect on assembly-line work it had on farm jobs a century ago. Employment nonetheless keeps rising, just differently (less work, on average, and more pay).

The U.S. is by far the world’s largest exporter; China is just fifth largest. It makes sense to worry less about cheap imported socks and more about valuable U.S. industrial and farm exports.

Recessions always hurt heavy industry the most and it always takes a few years to get back to normal. The booms and busts of cyclical industries are not the result of imports, which actually rise and fall in lockstep with manufacturing.

Ohio had a statewide unemployment rate of 6 percent in September, but even in August (when the statewide rate was higher) unemployment was only. 5.3 percent in Akron, 5 percent in Cleveland, 4.8 percent in Columbus and 4.1 percent in Hamilton-Middletown. Only three states had a higher rate. Among major metropolitan areas, high unemployment is mainly confined to Toledo and Youngstown. That’s not even a statewide problem, much less a national or international one.

Senator Kerry has nonetheless pandered to ill-informed anxieties about trade by talking about “outsourcing” without explaining what he means, and asserting, “thousands of Ohioans have seen their jobs shipped overseas.” He proposes to make U.S. companies “more competitive” by greatly increasing taxes on their overseas branches and also on their shareholders, customers and workers. Senator Kerry either does not understand these complex issues or he hopes voters do not understand them.

1 comment:

Ken McCracken said...

Wow, great blog, glad we are on the same side.