Posted by Brad @ 2:46 am on April 29th 2008

In Retrospect, Comparing Outsourcing to the Holocaust Was Probably a Bad Idea

There’s the right way to make the fair trade case.

And then there’s the wrong way.

Bonus: She Bush-izes the ending. “You…you’re not going to fool me again.”

At the union hall in Gary, she grew so animated in describing the plight of old-line industrial workers that she described them in language from the oft-repeated poem, attributed to the German pastor Martin Niemöller, about the victims of Nazism. “First they came for the Socialists, and I did not speak out, because I was not a Socialist,” goes the version inscribed on a wall at the United States Holocaust Memorial Museum in Washington. After coming for the trade unionists, it continues, “they came for the Jews, and I did not speak out, because I was not a Jew.”

In Mrs. Clinton’s version, she intoned: “They came for the steel companies and nobody said anything. They came for the auto companies and nobody said anything. They came for the office companies, people who did white-collar service jobs, and no one said anything. And they came for the professional jobs that could be outsourced, and nobody said anything.”

“So this is not just about steel,” she finished.


  1. Assuming this is true:

    But why, when America’s mini-mills and steel mills are among the most efficient on earth—in terms of man hours needed to produce a ton of steel—aren’t those jobs coming back?

    Answer: It is due to the free-trade policies of Bush and McCain, which permit trade rivals to impose value-added taxes of 15 percent to 20 percent on steel imports from the United States while rebating those taxes on steel exports to the United States. We are getting it in the neck coming and going.

    An America First trade and tax policy could have U.S. steel mills rising again, while those in Japan, China, Russia and Brazil would be shutting down as uncompetitive in the U.S. market.

    Should the US do something about it? Should we be advocating a different tax policy?

    And if you do not think it is true, why not?


    Comment by daveg — 4/29/2008 @ 6:00 am

  2. Fantastic. “American steel mills arising again”.

    You may recall Bush’s “America first” steel tarriffs. Because Americans just love paying more for steel, right? If there’s one thing that just has to be a great idea, its forcing Americans to pay higher prices as their patriotic duty, because stupid governments elsewhere do the same to their own populations.

    You can argue about wealth disparity within America if that’s your concern, but you’re not going to fix that by raising everyone’s prices (moves like that inevitably hurt poor people most, because must-buys form a larger part of their fractional income than for the rich).

    Comment by Adam — 4/29/2008 @ 6:30 am

  3. And high steel prices, of course, increase the prices of every consumer good or service which includes or involves steel, from canned goods to baseball tickets. Which means inflation, which means the fed lacks a free hand to reduce interest rates to combat recession…just a bad deal all around.

    Comment by Rojas — 4/29/2008 @ 9:31 am

  4. Furthermore, I don’t agree with Brad that Sherrod Brown is making the case the right way. Brown is just making the case less horribly than Clinton, with is damning with very faint praise.

    Comment by Adam — 4/29/2008 @ 9:51 am

  5. Presumably you think that because you disagree with him?

    Comment by Brad — 4/29/2008 @ 9:55 am

  6. If there’s a right way to make the case against free trade, it’s to argue that the protection of native industry actually is worth the increased cost of consumer goods. There ARE limited circumstances in which this is the case–such as for startup companies which would eventually stand to benefit from specialization due to the presence of local resources, but which will never survive long enough to become efficient unless they are initially protected from larger competitors, who are comparitively efficient only due to economies of scale.

    Or, you could argue that some of the specializations that make free trade economically desirable produce negative externalities that outweight the economic benefits–for instance, some nations gain specialization benefits through a complete absence of environmental restrictions on business or through ridiculously abusive labor practices.

    If anybody is making the “right” case against free trade in these threads, in my opinion, it’s daveg.

    Comment by Rojas — 4/29/2008 @ 10:12 am

  7. I do recall the steel tarrif issues and I will do some research on that.

    However, the issue I was trying to discuss is IF the American tax structure places US steel makers at a disadvantage relative to foreign competitors is that something Americans should be concerned about?

    Similarly, if other countries give their exporters tax advantages (or subsidies) relative to US companies, and these advantages are easily identifiable, is that something we should be concerned with?

    I know that it is true that VAT is not paid for goods that are sold outside the country, so that would seem to be an advantage for foreign companies.

    If it is true that, hour for hour, US steel mills are more efficient, then we have a straight up case of wage, tax and environmental differences…

    Comment by daveg — 4/29/2008 @ 11:46 am

  8. Seems like the steel tariff was a fairly short lived political stunt, no?

    The Section 201 steel tariff is a political issue in the United States regarding a tariff that President George W. Bush placed on imported steel on March 5, 2002 (took effect March 20). The tariffs were lifted by Bush on December 4, 2003.


    Comment by daveg — 4/29/2008 @ 11:55 am

  9. I guess the answer to your larger question, Dave, is that a 15% tariff only makes a difference competitively if the net cost of the product to the consumer would otherwise be within 15%.

    Third world industrial labor works for a fraction of what US steelworkers earn, and the costs of transportation to market are negligible relative to the labor expenses. So a tariff that would actually make US steel competitive would have to be in the 200-300% range.

    Comment by Rojas — 4/29/2008 @ 12:37 pm

  10. If it is true that, hour for hour, US steel mills are more efficient, then we have a straight up case of wage, tax and environmental differences…

    Those are exactly the differences of which we need to take advantage, incidentally. Make the same stuff where it’s cheapest, for God’s sake; it’s illogical to do otherwise. That may mean that some countries, like the US and UK, have to lower their costs somehow or else focus on other areas in which they are competitive. Excellent.

    Sales tax and VAT are always only charged on things sold within the jurisdiction, aren’t they? However, if sales tax or VAT would have been levied on them were they bought in place A rather than place B, importing them into place A having purchased them in place B does generally end up with sales tax being levied; of course, VAT is only charged to the end user, so an industrial consumer wouldn’t pay VAT in any case (in the UK and I believe the rest of the EU, VAT is an end-user tax) and there would be no tax levied on its import if they bought it in place B.

    What I don’t understand is why trade restrictionists don’t address the fact that things will cost more as a result and admit that it’s poor people that will be most affected by that. God knows, I’m not a bleeding-hear liberal poor-people lover, but let’s face facts. They should admit that things will cost more and then somehow explain how this is a better thing because everyone will earn more even than the fractional price increases. Oh, and money grows on special trees that only grow in Washington DC.

    Comment by Adam — 4/29/2008 @ 12:47 pm

  11. Believe it or not I am for free trade, but I see a lot of danger in “partial” solutions.

    For example, I could support Ron Paul with little reservation becuase he was going to combine his free trade policy with an elimination of the federal income tax and hopefully deregulate the health care industry.

    In that environment, I think the US would prosper and people would have the extra money and freedom to take care of themselves and the investment environment in the US would be second to none.

    And it was honest, in that Ron Paul was not hiding the fact that you were going to lose a lot of your social protections as part of the deal.

    So, his policy was smart and honest.

    What I see as dangerous is libertarian-punks of the Reason ilk (yes, I used to subscribe) pretending that you can have free trade with our current tax and regulation structure. It is not sustainable and we are seeing the effects which include huge debt at both the state and federal levels, currency inflation, huge job losses overseas and an ever increasing separation of wealth within the population.

    Being a hardened paleocon I don’t object to separation of wealth on a moral basis, but rather I worry how it will affect my quality of life including crime, ability to educate my kids and falling support for freedom and true libertarian principles.

    You have to unwind the spring slowly and intellegently or it will just explode in your face.

    Comment by daveg — 4/29/2008 @ 1:01 pm

  12. I think that free trade with the current tax structure is better than the current tax structure without free trade, but I’m very happy for the tax structure to be changed too, oh yes (paid for by spending cuts). As for regulation, I think that a lot of it would be replaced well by market forces (including litigation).

    As for social spending, the more free trade we get in labour (a very good thing, I believe), the less social spending there can be, if we don’t wish to import dole scroungers (and empower the American ones already here).

    As for health, I don’t know what the answer is; I suspect that it isn’t simple, whatever it is, but it’s also highly contingent on what figures of merit people use to measure health services. Someone that wants the best available healthcare for those that can afford it will have different metrics from those that believe that access to decent healthcare is, or should be, a right. That conversation has to come first.

    Comment by Adam — 4/29/2008 @ 1:08 pm

  13. Interesting comment on the trade issue with links to other sources including a Larry Summers editorial here.

    …growth in the global economy encourages the development of stateless elites whose allegiance is to global economic success and their own prosperity rather than the interests of the nation where they are headquartered. As one prominent chief executive put it in Davos this year: “We will be fine however America does but I hope for its sake that it will cut taxes and reduce regulation and put more pressure on young people to study in the ways that are necessary for it to be able to keep competing successfully.”

    Can’t have a welfare state and free trade.

    Comment by daveg — 4/30/2008 @ 2:16 am

  14. I know which one I prefer.

    In fact, in the longer term, I’m not sure of the extent to which can have much of a welfare state at all, although it would take some considerable decades for the wheels to come off (all eyes on Sweden over the next half-century, I guess).

    Comment by Adam — 4/30/2008 @ 7:46 am

  15. If all eyes are on Sweden, it’s presumably due to the hot blondes, not the social welfare policy.

    Maybe they could try to incorporate the one into the other?

    Comment by Rojas — 4/30/2008 @ 8:55 am

  16. A hot blonde in every pot!

    Comment by Adam — 4/30/2008 @ 9:07 am

  17. Forty acres of land and a hot blonde?

    Comment by Adam — 4/30/2008 @ 9:08 am

  18. “Things you plow” for $100, Alex.

    Comment by Rojas — 4/30/2008 @ 9:55 am

  19. You win the internet today, Rojas.

    Comment by Mark — 4/30/2008 @ 10:55 am

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