Jewish World Review May 27, 2003 / 25 Iyar, 5763

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Consumer Reports


America's export problem


http://www.jewishworldreview.com | We're in a modest economic recovery, one that is still fragile. And this recovery is not creating jobs. I'm far more concerned about the jobless nature of this recovery than the level of interest rates or the market levels.

Government and corporate policies are now sending more jobs, capital and American know-how overseas to produce goods and services more cheaply. The proof is in the numbers: The United States' current account deficit, the broadest measure of transactions with other nations, swelled to $503 billion in 2002.

That's not the way it was supposed to work. Increased global trade was supposed to lead to better jobs and higher standards of living. Now some people, myself included, are rethinking the belief that free trade benefits all nations.

According to the Economic Policy Institute, rising trade deficits cost 3 million jobs in the United States from 1994 to 2000. And a report by Forrester Research predicts that nearly 500,000 tech jobs will be moved overseas by 2015.

We're also exporting capital. Companies like Motorola have invested billions of dollars in China, the country with the largest trade imbalance with the United States.

Another problem resulting from America's trade imbalance: Intellectual capital is being shipped overseas - in some cases, raising national security concerns.

So what's gone wrong? Alan Tonelson, author of "Race to the Bottom," says that Corporate America is largely to blame.

"They sold America a bill of goods during the 1990s," Tonelson says, "because they said that all of these new trade agreements . were going to boost exports from their American factories. And what they've done is, they've used these trade agreements to send production abroad."

Of course, American businesses need to look for ways to control their costs. And consumers are often driven in their purchases by prices.

And it's not just Corporate America that needs to adjust to the new global marketplace. Federal and local policymakers need to recalibrate as well.

David Huether, chief economist at the National Association of Manufacturers, says policymakers need to ensure that the regulatory environment is conducive to maintaining our competitive edge. "To make domestic manufacturers more competitive," he says, "we have to make sure that there aren't future increases in regulation that would push up costs here."

Huether adds that the federal government should promote trade adjustment assistance to help displaced workers find new employment.

We also need legislation that encourages companies to keep jobs here.

"The only way we can get in on this game is to . make penalties for those who manufacture overseas and benefits for those who manufacture in the United States," Sen. Fritz Hollings, D-S.C., told me. "I have a bill to keep the jobs in this country. It's going to be an uphill fight because we've got to really change the culture."

Changing the culture won't be easy. The middle class has little representation in Washington, the multinationals have little incentive to produce here at home, and working men and women in this country are watching their paychecks shrink in response to the competition of lower paid foreign workers.

And Huether says that policymakers also need to lower barriers to trade overseas. "Our tariff rates on industrial goods average less than 2 percent," he says. "The rest of the world, particularly developing Asia, is a lot higher - in the area of around 10 percent."

Huether says that on the corporate side, businesses need to invest in their employees.

"The way that manufacturers compete is through their very high productivity," Huether says, "and one of the ways to do that is . by maintaining a very able and trained work force."

There's no easy corporate or government policy solution to America's export problem. It's time for corporate leaders and policymakers to heighten their efforts to keep American jobs from going overseas.

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