By Hunter Wallace
A decade ago, Lou Dobbs was thundering against free-trade and illegal immigration on his CNN television show, Lou Dobbs Tonight. These issues resonated for years but didn’t find a political voice in the mainstream until Donald Trump’s presidential campaign.
I was in college at the time and was becoming interested in these issues. In 2004, Lou Dobbs published a book called Exporting America: Why Corporate Greed Is Shipping Jobs Overseas which summarized his views on trade issues. I bought a copy and it has been sitting on my bookshelf ever since. In light of recent events and renewed interest, I decided to read the book again to see how it has held up over time.
Basically, Dobbs argues that free-trade led to 28 consecutive years of trade deficits, three trillion dollars added the national debt (Asians own over half of US Treasury bonds), the export of millions of middle class jobs and our industrial base overseas, the decimation of entire industries, the ruin of labor, record levels of household debt, the two-income household and decades of stagnant real wages for American workers. The United States was supposedly moving from an “industrial economy” to an “information economy.” Yeah, we are offshoring the computer scientists, IT workers, accountants, paralegals and radiologists too. Sorry guys.
It’s really this simple: in the name of free-trade, we throw open our market to foreign goods that enter nearly duty free and refuse to tax income earned abroad. American companies move to the Vietnams, Chinas, Mexicos to avoid paying taxes and to replace their American workers with foreigners whom they pay a fraction of American wages. Instead of producing goods and services here and creating employment in America, we import them from overseas, thereby generating economic activity and tax revenue in other countries instead of here.
Ten years later, the US trade deficit has gone from $610 billion in 2004 to $508 billion in 2014. We have run a trade deficit every single year since the book was published – 38 consecutive years now in total – and sent several more trillion dollars of our wealth overseas. The big change is that oil imports have gone from 26 percent of the trade deficit in 2004 to 55 percent in 2012 and down in 20 percent in 2014. At the same time, the trade deficit with China has gone from $162 billion in 2004 to $343 billion in 2014. In other words, fracking has improved the trade picture on the energy front by reducing oil imports, but imports of manufactured goods from China has gotten much worse.
You have probably heard from the free-traders that we need to “innovate” more in America. Well, the great innovation of the last decade – the smartphone – is one of the things driving up the trade deficit because the damn iPhone is made in China. We’re also told that we need to “educate” more Americans and our universities do a great job educating foreigners in STEM who go back to China and India where the production and jobs are increasingly located thanks to free-trade. No amount of innovation or education will create middle class jobs in America if all the goods and services attached are produced overseas.
On this day in 2004, the US had a national debt of $7 trillion dollars, but right now we are $18 trillion in debt. We “innovate” everything from automobiles to consumer electronics to semiconductors to computers to smartphones, export the production and jobs associated with those technologies overseas, and go into debt to import the products back here because we are averse to employing our fellow citizens. In 2004, the jobs of the future were being created in food service and retail, which the latest BLS report shows is also true for October 2015.
Signed by President Obama, the US-South Korea Free Trade Agreement went into effect in March 2012. Three years later, the US trade deficit with South Korea has grown from $13 billion in 2011 to $25 billion in 2014. This free-trade agreement was supposed to increase exports by at least $10 or $11 billion dollars. It doubled imports while exports barely changed. In 2000, Bill Clinton promised that China’s entry into the WTO would create all kinds of American jobs.
Someone ought to write a book on the history of crackpot free-trade predictions – the trade deficit with Mexico ballooned from $1 billion in 1994 to $54 billion in 2014 thanks to NAFTA – for future generations will know what brought down the American economy in the early 21st century. Everything Lou Dobbs was saying back in 2004 about free-trade remains true today. The recent passsge of fast track authority for free-trade agreements will accelerate “Exporting America” dramatically.
As the old Dutch saying goes, cheap is expensive. Free trade isn’t free.