Our Congress at Work: Further discussion

In his discussion today on the Tea Party Nation web site Judson Phillips puts forth the argument that free trade agreements with other countries are harmful to the economy of the United States.  Mr. Phillips very correctly states that very few of our day-to-day products are made in the USA.  I agree with many of the points Mr Phillips brings up.  He is correct when he says we manufacture very little of our infrastructure equipment here.  He is correct when he says that we need to manufacture here.  But he is incorrect in his assumption that it was the NAFTA agreement caused the job bleed here in the US. In a working paper for the US Bureau of Labor and Statistics. Jay Stewart examined employment trends and job security. Here is his Abstract from his evaluation.

This paper examines long-term trends in job security by looking at employment-to unemployment transitions in the March CPS. Unlike other datasets used to examine this issue, these data provide a consistently defined measure for the period covering 1967 through 1997, are available every year, and cover all workers. I find that job security appears to have declined during the early 1970s, but from the mid 1970s through the mid-to-late 1990s, there has been no change. These findings are consistent with the popular perception that jobs were less secure in the 1980s than in the 1970s, but they are not consistent with the perception that job security continued to decline in the 1990s.

Note he is saying the perception of job security loss in the 1990’s.  This would be the same perception that the NAFTA agreement cost the country millions of jobs.  But the evidence shows that jobs where leaving the US as early as the 1970’s.

Mr Phillips closes his discussion with this statement.

Congress needs to be working on protecting American jobs, not opening the door wider so we can hear the giant sucking sound of even more American jobs going overseas.  Congress needs to be working to protect the American manufacturing base so that we can buy items crucial to American national security that are made in America.

Congress needs to start working for America because free trade is not working for America.

What exactly are we talking about here?  Mr Phillips has  a large audience but is he serving them well by making such protectionist comments?   A reading of Milton Friedman’s Capitalism and Freedom would be advised at this point for all lovers of American freedom.  Friedman talks of tariffs and artificial trade restrictions and proposed we lift or eliminate both.  Why?  He answers this way

There are few measures we could take that would do more tho promote the cause of freedom at home and abroad. Instead of making grants to foreign governments in the name of economic aid – while at the same time imposing restrictions on the products they succeed in producing – and thereby hindering free enterprise – we could assume a consistent and principled stance.  We could say to the rest of the world: We believe in freedom and intend to practice it.  No one can force you to be free. But we can offer you full co-operation on equal terms to all.  Our market is open to you.  Sell here what you can and wish to.  Use the proceeds to buy what you wish.  In this way co-operation among individuals can be world wide yet free.

Friedman one of the most outspoken free market economists hits the nail on the head. What needs to be discussed is not a protectionist stance by our government but a get out-of-the-way stance by our legislatures and President.  Between taxation of people and corporations and the restrictions by unconstitutional (and Socialist) regulations imposed by agencies that have no real authority based on the constitution we have lost our competitive edge.

We do not have a free trade issue.  We have a taxation and control issue.  Do we need to hold Congressional feet to the fire.  Yes!  Do we need Protectionist measures?  No!  Such measures can be called nationalist and even considered central planning (Socialist).  We need lower tax rates for all and less government.  It will be tough  but it must be done to make us competitive again.

BLS working paper: http://www.bls.gov/osmr/pdf/ec000050.pdf

Milton Friedman’s book: http://www.amazon.com/Capitalism-Freedom-Phoenix-Milton-Friedman/dp/0226264017/ref=sr_1_1?s=books&ie=UTF8&qid=1315064024&sr=1-1


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