Democratic Diva

Bye American

04 Feb 2009 12:48 pm
Posted by: Donna

Senator Mitch McConnell, Republican minority leader in the chamber, urged President Barack Obama to get rid of the so-called “Buy American” clause in his economic stimulus plan. McConnell’s words came shortly after key allies responded with outrage to the Democratic proposal.

warned earlier Monday that US protectionism “can only trigger retaliatory action.” Like McConnell, Canada Trade Minister Stockwell Day urged Obama to fight the provision.

“I don’t think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars when the entire world is experiencing a downturn in the economy,” Senator McConnell said.

Trade war? What trade war are ya talking about, Mitch? The one that has produced America’s current epically-proportioned trade deficit? That one? Dude, you’re really going to have to come up with something more ominous-sounding than that. And with all due respect to our dear friends in the Great White North, bite me Mr. Canadian Trade Minister. Call me ‘protectionist’ all you want but I’m sorta protective of my tax dollars that are going toward a stimulus package that is intended to create jobs in America. And I don’t give a rat’s patootie about bogus trade agreements that were entered into over the strenuous objections of working people across the Western Hemisphere. If the Buy American clause violates an agreement, then change the agreement, pronto. Or get out of them completely.

Say it with me: What part of U.S. TAXPAYER FUNDED stimulus do they NOT understand?

But let’s be real. This isn’t about trade. That’s the red herring that the greedy multinational corporate pigs throw out to distract us. A trillion dollars is a big ol’ pile of cash and the usual cast of gluttons want to get their grubby grasping mitts on it so that they can use the cheapest labor and the cheapest materials, do shoddy work, and rake in the profits. See: Iraq reconstruction, post-Katrina rebuilding, and pretty much any boondoggle any Bush crony has ever been involved in. Folks, they are not going to be wrested off that gravy train gently but we can at least recognize their lies and spin for what they are.

Needless to say, I’ve been slightly irritated over this for the last few days and my concerns are not alleviated by the fact that Obama appears to be softening on the Buy American clause. Speaking of lies and spin, from the article:

Gordon Brown was caught in the crossfire as John Bruton, the EU Ambassador to Washington, said that “history has shown us” where the closing of markets leads — a clear reference to the Depression of the 1930s, triggered by US protectionist laws.

History? What history? Bruton is likely referencing the Smoot-Hawley law of the early 30s, which placed tariffs on a number of American goods. Lately, you will hear a lot of right wing and corporate tools making the easily debunked claim that Smoot-Hawley worsened, prolonged, and even caused (!) the Depression. Divas, let’s get to debunking:

(I apologize for it being a little hard to read. I had to format it to fit the page. Here is a more legible one) Notice that while trade did indeed decline precipitiously during the years S-H was in effect (1930 to 1934) so did personal consumption and domestic investment, which throughout the 30s were much larger pieces of the GDP than trade was. Also notice government spending, which was relatively low in the Smoot-Hawley period. That was when FDR was trying to get his New Deal policies implemented and was being met with opposition by the same type of plutocrat-toadies that are giving Obama a hard time now. I submit that had a lot more to do with the sluggish recovery than tariffs and the ensuing “trade wars”. But the most important thing to note is the highlighted line called “net export of goods and services”. That’s exports minus imports, with the resulting figure added to the GDP to determine the actual effect of trade on the U.S economy. In 1930, net trade was $.3 billion or .3% of the GDP. In 1938, four years after that horrible, awful Smoot-Hawley ended net trade was…$1 billion, or 1.1% of the GDP.

Now, if you’re a paid shill for the American Enterprise Institute you might look at that and proclaim, “Crikey! Trade more than tripled because that wicked protectionist Smoot Hawley act was repealed!” On the other hand, if you’re a not the kind of sociopath and compulsive prevaricator that works at a right wing think tank you might look at that chart and think, “Meh, looks like international trade just wasn’t a big part of the U.S. economy in the 30s. It’s likely that things like domestic investment and government spending probably had a lot more to do with getting us out of the Depression.” I submit that Smoot Hawley may have been unnecessary. It may have served more as a populist bone thrown to U.S workers than anything that was meant to have a significant impact on the economy. The same arguments could possibly be made against Buy American clause of the current proposed stimulus. And yes, there may be legitimate arguments to be made against protectionism in general, but this isn’t one of them. Proponents of Flat Earth Globalism need to defend their theory in good faith and on the merits, not lies about history. Lies make a Diva cranky.

Grr.

Hat tip to The Economic Populist for the chart.

Public Citizen’s Eye on Trade blog has some excellent debunkage of the corporate stooge line on the Buy American thing in several of its latest posts: Link