(Fred Weinberg) – Apparently, corporate America is now paying attention to the new administration’s attitude towards fair — as opposed to free — trade.
United Technology caved on the Carrier move, Ford has decided not to build another plant in Mexico and General Motors is now clearly reconsidering its Mexican strategy.
Devotees of the Chicago and Austrian schools of economics are busy screaming to high heaven about “free” markets, but the fact is that sending auto assembly jobs from Michigan, Ohio, and Kentucky to south of Ciudad Juarez—where the minimum wage just went to $5.18 an hour—and then sending those products back to Ohio, where the auto workers average $29 an hour is hardly free.
The upside is that the manufacturer theoretically makes more money. The downside is that, absent a robust domestic economy, nobody can afford the product—either in Mexico where $5.18 an hour won’t pay for a $25,000 car or in Ohio where unemployment insurance won’t pay either. Which means that the upside eventually becomes the downside after several quarters, maybe as much as 20 years, of artificially good performance.
This inflicts upon us the conflict between our national interests, our domestic manufacturing companies, and our domestic economy.
Absent a level playing field—which this is definitely not—we must go with our national interest.
The question is no longer purely economic.
It is whether or not we can be a superpower without taking care of our own citizens first.
Bill Clinton won two elections with “it’s the economy stupid”. Back in 1992, however, Clinton didn’t see the North American Free Trade Agreement the same way that a serious businessman, Ross Perot, did.
“If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory south of the border, pay $1 an hour for your labor, have no health care, have no environmental controls, no pollution controls, and no retirement, and you don’t care for anything but making money, then there will be a giant sucking sound going south.”
Perot said that on October 15, 1992 in a debate between Clinton, George H. W. Bush and himself.
While the phrase giant sucking sound became part of the lexicon, Perot was regarded like Donald Trump by many but his prediction has been vindicated even though he lost the election.
In the meantime, NAFTA became a signature of both the free trade crowd as well as those who think we somehow owed Mexico an opportunity to be our equal—on our nickel, of course.
By 2015, Hillary—and probably Bill who is a consummate reader of political tea leaves—realized NAFTA, and the baggage it was dragging with it, was a liability. That Ross Perot and, by extension, Donald Trump were right.
She couched it in touchy feely terms but she walked away from the Trans Pacific Partnership which was NAFTA for the Pacific. And, like John Kerry, she was for it before she was against it.
The truth is that nothing in real life is a zero-sum game.
Donald Trump, love him or hate him, observed what Ross Perot did in 1992 and, 24 years later, figured out how to use it more effectively than did Perot.
And Bill Clinton will probably, given the chance, tell you that it’s ALWAYS the economy, stupid.
So, if Trump can also figure out how to make those better deals he promised, using the same tools every President has, he may be able to level the playing field.
If that means a resurgence of domestic manufacturing, than we’re all big winners.
Mr. Weinberg is publisher of the Penny Press. Get to know more about him by visiting www.PennyPressNV.com.
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