America Pay Up

Most of us have been acutely aware that our wallets, bank accounts, and retirement funds are under siege from unseen forces.  Everyday increasing numbers of people are losing their jobs and the stock market feels more like skydiving than a roller-coaster ride.  Some are declaring this the second Great Depression while others say no.  Rohm Emmanuel told the WSJ, “You never want a serious crisis to go to waste.”  While we fret about our personal economic futures, there are people around the world working overtime trying to exploit this crisis.

Wednesday, British Prime Minister Gordon Brown addressed a joint session of the U.S. Congress.  Previous British PMs have focused on foreign policy issues but today’s political issues are quite different.  Brown barely made more than a passing mention of the Middle East or Iran, and mentioned no other international issues.  Instead, Brown chose to focus on the global economic downturn.  It’s not a surprising and even quite appropriate.

In this address Brown shied away from actually blaming America for the crisis.  Rather he only eludes to it, “we need to understand what went wrong in this crisis, that the very financial instruments that were designed to diversify risk across the banking system instead spread contagion across the globe. And today’s financial institutions are so interwoven that a bad bank anywhere is a threat to good banks everywhere.”  We know which banks led the charge.

Brown appealed to the Obama administration not to become protectionist but rather join Britain in leading a global economic stimulus.  “So should we succumb to a race to the bottom and a protectionism that history tells us that, in the end, protects no one? No, we should have the confidence that we can seize the opportunities ahead and make the future work for us.”  I know I am flying in the face of my economic education and the majority of Americans, however, it is my opinion that the abolition of import tariffs and excise fees are at the root of the global economic crisis.

What?  How could this be? Aren’t the housing bubble bust, subprime mortgages, bank deregulation, and the war in Iraq to blame?  Everyone seems to have come to this conclusion.  Rather than rehash the same rhetoric, I will summarize, free trade shifts government revenues from foreign imports to individual and corporate taxpayers.  Free trade makes first-world labor too expensive and third-world labor extremely attractive.  As manufacturing, textiles, mining, and oil production leave a nation it erodes the ability of the first world to produce things and this undermines the foundational economic strength.  Furthermore, when a nation no longer knows how things are manufactured, innovation is stifled.  Can an engineer design something to be efficiently manufactured if he or she has never seen a factory?  No, the engineer must be flown to plants halfway around the globe, an expensive process that must be repeated often.  Any smart company will eventually figure out that it would be cheaper to hire R&D engineers close to manufacturing, thus eventually the first-world loses that ability as well.  (I suspect someday this theory will be recognized but I will get no recognition for it.)

Thus, I don’t buy it when PM Brown says, “America and Britain will succeed and lead if we tap into the talents of our people, unleash the genius of our scientists and set free the drive of our entrepreneurs. We will win the race to the top if we can develop the new high-value products and services and the new green technologies that the rising numbers of hardworking families across our globe will want to buy.”  While I agree the U.S. and the U.K. still have the “genius” to develop new high value products and green technologies, I disagree with who profits.  These products will be manufactured in China or some other developing nation that employs virtual slave labor and the profits will benefit only the top brass of multinational corporations and their stockholders.  The U.S. certainty doesn’t benefit in job creation, since clearly no one here will be building anything.  A few service and sales jobs perhaps, but hardly three million.

But let us return to Brown.  When Brown said, “America knows from its history that its reach goes far beyond its geography. For a century you have carried upon your shoulders the greatest of responsibilities: to work with and for the rest of the world. And let me tell you that now more than ever the rest of the world wants to work with you,” he meant, you rebuilt the world after WWII and now we expect you’ll foot the bill again. Sure a few paragraphs later he claims, “America and a few countries cannot be expected to bear the burden of the fiscal and interest rate stimulus alone. We must share it globally.”  But how does the following line, delivered only a few seconds later fit in? “Let us … [help] the emerging markets rebuild their banks…”  I believe this would require a sizable injection of capital from some major nation, maybe a cash cow like the United States.

But wait, that’s not all, he wants the U.S. to finance the education of “every child in every country of the world.”  Did you catch the “do it for the children” appeal?  Brown understands how to play the American audience, suckers and idiots all.  Besides the sheer cost of such an undertaking, there are implications that far exceed the kind sentiment.  There are national sovereignty issues, religious, and cultural issues.  Some have gone so far as to suggest that Brown’s address laid the groundwork for a single world government proposal.  I hate treading on that ground but it could lead us into that discussion.

Read the full transcript along with British opinion at:
    • reedkeys
    • March 9th, 2009

    sigh. . .free trade again. . .ok maybe I’m naive or just an insensitive conservative but as I understand it, the jobs you call “virtual slave labor” are actually among the higher paying jobs in those countries. I have no figures for this, but that’s my understanding. Brown’s right in that we need to work together, but other than that, he’s an idiot (with all due respect to this blog’s author and other American idiots). There’s no stability in the global warming movement (now being called “climate change” and “green technologies” since it’s clear now that the globe isn’t getting any warmer, but I digress) so “green technologies” are all over the map. Nothing has proven to be more viable than oil and there is plenty of it. If people want electric cars that only go 35mph, then they will demand it and the market will respond. The world is going through a rise in socialism with both the US and the UK, among others, encouraging more government control. All the more reason for conservatives to make a stand. If they don’t, who will?

    • Ah check the page to fully understand the name An American Idiot. Aside from that, someday if you live long enough you’ll realize I am right on Free Trade. As for the “virtual slave-labor” these jobs are not higher paying jobs in most cases and further reading on this topic will show you in China workers can be beaten for complaining about their pay. Workers in many nations can be forced to work extended hours without additional pay and many are paid piece meal at a penny or less per piece. Autoworkers in Mexico make just over $1 an hour. Documentation exists in my various essays on the topic.

    • reedkeys
    • March 12th, 2009

    Thanks for the correction on the slave-labor issue but I prefer to live in a haze of prejudice and ignorance on the subject so if it’s ok with you I’m just going to pretend you didn’t address it, OK? LOL

  1. When one listens to Gordon Brown’s speeches at the G20 Conference then all that he is saying here becomes crystal clear. One World Government is his goal and bringing the US into the European Union, and both the US and Great Britain accepting a world currency is the first step in this process. They did agree to a world wide Global Financial Regulatory Agency. I don’t see even a Democrat controlled Congress going along with any of Obama’s agreements at this G20 Conference, but then I never expected the Democrats and the MainStreamMedia to accept the level of duplicity Obama exhibited on his April European tour either, but almost a week later the only place you can see the picture of The Bow is in overseas paper/TV and the Internet. BB

  2. RE: Who is legally due what. Please cite the relavent laws. Since the dawn of civilization the workman has been due his wages, the vendor has been due payment for his goods, and entitlements are paid under laws you must be familiar with. All government spending is authorized by law. I don’t mind a quick trip to the dictionary, but I am not sorting through 60 years of congressional bills to prove that which should be intuitively obvious to the casual observer. Dreading analogies: You are at a meeting providing box lunches. You get one, but the last 10 people in line do not. Did you steal theirs? Two problems here. First, this question would be analogous to asking if Geithner paid the bondholders, then would the bondholders be stealing the funds that were shorted to others. No one is making this argument, so that when I agree that I am not stealing anyone’s lunch, it has no bearing on our actual discussion.Second, if we were to take the extra step of converting your question to the more analogous question of whether the sponsors of the lunch were stealing from the last 10 people in line, we lack the information/assumptions to make this determination. Were the people enticed to the meeting with the promise of boxed lunches? Did they pay for boxed lunches? Was the answer to one of the prior questions yes , compounded by the fact that the sponsors knew in advance that they did not have enough lunches? Given another yes, did the sponsors neglect to make an effort to provide lunches for the last 10 people in line? If so, then yes, the sponsors were stealing. Imagine if Geithner, who has a history of admitting to not doing his job, Irrelevant. fails to placate the bond market, who believe that the USG will default on bond payments. Existing bondolders see the value of their investments plunge. A personal bummer for many, kind of like happened with homeowners. Equality anyone? The market for US debt dries up. Interest rates go up, the cost of re-fi goes up, interest rates on future bonds go up, and there is even less money for SS, defense, medicaire, medicaid, etc. Here is the crux of your argument. You are very fearful about this admittedly bad outcome, and will do anything to avoid it. But if investors see that the USA won’t pay all of its obligations, the credit suffers anyway and all the above still happens. I’ve mentioned this before. You alluded to this yourself in post 108 where you claim that rates are going up because of current slow pay to the military. How long do you think one can retain any standing in the market with the argument that sure, I’m a deadbeat, but I’ll always pay you? If you don’t keep your obligations, people will recognize that you don’t keep your obligations, no matter how badly you wish otherwise.Fortunately, a plurality of the Republicans who are playing you recognize this too. You will soon see Senator Boner recreate the Cleavon Little hostage taking scene from Blazing Saddles. The Tea party will hope he shoots. The stupid/corrupt Democratic party will give him something, and he will back down. Then Reps and Dems will go home with a victory. Rate this comment: 0 0

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