Jewish World Review Sept. 9, 2004 / 23 Elul, 5764
Kerry's coercive economic patriotism threat to U.S. firms, global prosperity
For love of a horse race, the recent injection of talent into the Kerry campaign sounded like a good idea. The old Clinton strategists have parachuted in to get the Democrat back on course after the GOP convention. Less Vietnam, more Keynes was the plan, since voters give John Kerry his only lead a 3 point margin on domestic economic issues.
So the folks who brought us "It's the economy, stupid" are now trying to market Kerry as the Sesame Street candidate. " 'W' stands for 'Wrong,' " Kerry has thundered. And President Bush is the "Outsourcer in Chief."
Impressed as we are by Kerry's spelling prowess, he's now articulating a protectionist policy prescription to make Pat Buchanan blush. The plan is to create economic patriotism similar to the "Buy American" campaigns of old, but by coercing the behavior of business instead of rallying consumer choice. By closing "loopholes" and offering "rewards," Kerry says he'll make American companies keep their jobs here.
Fat chance. Even if government wanted to do such a dimwitted thing, it couldn't begin to compensate businesses for revenue they would lose by operating inefficiently. Nor do protectionist policies sit well overseas, a lesson Bush himself learned the hard way after seeing his steel tariffs smacked down and threatened with retaliation abroad. (Wasn't Kerry supposed to be all about patching up relations with our "allies"?)
At the moment, Kerry seems to be doing his own part for the economy, hiring half the country to join his campaign staff. He shouldn't look too closely at the sources of his campaign wealth, though. Hollywood sends scads of post-production work and animation to India, while movies are shot in Canada. The Heinz Company being efficient and sensible operates 57 of its 79 factories overseas.
Of course, we applaud anything that keeps condiments plentiful and cheap, even if Heinz's good business sense is the source of Teresa Heinz Kerry's fortune. But then where does Kerry get off opposing trade deals with countries such as Singapore and Chile? They're hardly powerhouse threats to American prosperity. He and running mate John Edwards supported trade with China, a country that poses a much greater competitive threat to the sort of American jobs that are no longer holding their own, but then that was before they began running for the White House.
Of course, any first-year analyst will tell you that job growth has been slow to recover in part because businesses have preferred to focus on productivity rather than rehiring.
Even so, the unemployment rate attached to today's "slump" is comparable to the unemployment rate facing Bill Clinton after his first term. Compare that to the 9 percent rate now in France and Germany and you start to get the picture. Around the world, rich countries are falling behind in the scramble for jobs not because of "unfair" competition but because of the tax and overhead costs imposed by their welfare states.
Meanwhile, Kerry's economic prescriptions should be seen in the context of our times. Contrary to the protesters at the Republican convention, you cannot sensibly be against globalization and the war in Iraq. Trade is the road to peace and prosperity for poor and often unstable nations. We contribute more in direct investment to developing nations than we send in government aid. The process has lifted more people out of poverty in China than anything else. Does anybody doubt that peace and stability for the whole world have been helped by China's shucking off of Maoist radicalism for capitalist growth?
And stay with us when countries break through the ceiling of $3,000 per capita gross domestic product, every indication is that they tend to get out of the violence business, according to "The Pentagon's New Map" author Thomas Barnett. We help get countries over that threshold through investment and the multinational corporations that Kerry has demonized.
That's a tough notion to fit into a campaign slogan not as catchy as accusing Bush of "exporting America." So Kerry's plan is to close the tax loopholes for outsourcing and "reward" companies that help create jobs here at home. He also would raise taxes on "the rich" and small businesses, while offering "incentives" (read tax breaks) to major corporations that engage in inefficient business practices.
To a less nuanced mind, this sounds like what the left used to call "corporate welfare." More broadly speaking, we should be troubled at the prospect of an America that wants international co-dependency with the United Nations while galvanizing American companies to withdraw from the world.
John Sweeney, head of the AFL-CIO, has huffed that "companies like Maytag are more loyal to the American dollar than they are to the American flag." Never mind that Sweeney's union members today are increasingly public-sector bureaucrats and health-care workers, not factory workers. When was the last time labor decided to moderate its wage demands for "patriotic" reasons?
For that matter, Kerry hasn't held a job in the private sector since he was making cookies 30 years ago, and Edwards' most sustaining relationship with the drivers of the American economy has been by suing them.
We hope businesses will keep focusing on making the best products at the lowest prices, wherever that leads them to invest and hire. That's certainly likely to produce better results than trying to figure out what Kerry wants them to do by sorting through the mess of conflicting "incentives," taxes and mandates he has been proposing.
JWR contributor Collin Levey is a weekly op-ed columnist at the Seattle Times. Before joining the Times in September 2003, she was an editorial writer and editor for The Wall Street Journal. Comment by clicking here.
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© 2004, Collin Levey