23
Jan
15

The State of The Union 2015 – U.S. Jobs

WASHINGTON: Obama allies vow to fight his State of the Union plea on trade | McClatchy Tribune News Service | The Bellingham Herald.

The President recently gave his State of the Union speech. In general, the economic picture for the United States is looking good. Unemployment continues to drop, but wages have not been rising. The President brought out some interesting ideas in improving the middle class, especially the “Free” community college (the “free” is funded by raising capital gains taxes which effects only the top 1%).  Community college, in this realm, usually means vocational school. This is the same model employed by Germany. In Germany, their free vocational school takes students and specially trains them for high tech jobs. And high tech job skills are in extremely high demand, but in short supply in U.S. workers. This is one of the reasons that high paying tech employers have been recruiting foreign citizens who already have these skills. Free community college would immediately remedy this (if done properly). Will this idea get funded because it is good for the country like the GI Bill? Probably not. Not because we can’t, but, politically, the GOP hasn’t done much for the middle class lately, not since George W. Bush, in 2007, raised the minimum wage of $5.15/ hour to the present $7.25/hour. The Republican Party wasn’t always anti-government. It happened once they lost the Presidency in 2008. And because they continue to be anti-government, even though they have control of both houses of Congress, it is unlikely they would pass a serious infrastructure bill to improve bridges, highways, telecommunications, etc – you know, things that traditionally have helped businesses.

The Trans-Pacific Treaty

In matters of agreement between President Obama and the GOP, there is The “trade agreement.” If you hadn’t noticed the President and the GOP supporters refer to it as “The Trade Agreement.” They never refer it as the Trans-Pacific Paartnership (TPP for short). It is only the opponents that name the TPP. My guess is that the TPP has a negative connotation to the public like Obamacare, instead of The Affordable Care Act. The difference is The Trans-Pacific Treaty is its actual name.

Also, if you noticed when the proponents talk about “The Trade Agreement”, they justify it as saying it will increase U.S. exports to these countries. Whereas, when they were passing the North American Free Trade Act (NAFTA), they were selling the point that prices of products will go down. (And as soon as NAFTA passed, the next day, The World Trade Organization was organized where even more countries involved, China joined in 2001). What happened after NAFTA and the organization of WTO was unexpected by everybody. What happened was large corporations found that they had little regulation in producing inferior products in substandard working conditions creating a new economic boon for them. They flooded the U.S. market with their inferior products underselling regular priced US made products, shutting down tens of thousands of U.S. businesses and manufacturing plants, and then shut down other manufacturing plants and outsourced their jobs to China, Vietnam, Taiwan, Bangladesh, etc., so they could make more profit. The cost – enormous: the loss of  6.2 million U.S. manufacturing jobs 1994-2010, many high paying and an ever increasing immense trade deficit. (525,000 American jobs lost to NAFTA from 1994 to 2003 from the Congressional Research Service and 3.21 Million U.S. jobs lost due to China from 2001-2013 from Economic Policy Institute.)

NAFTA passed in 1994, WTO created 1995, see the decrease in US manufacturing

NAFTA passed in 1994, WTO created 1995, see the decrease in US manufacturing, especially after China joined the WTO in 2001

So, now the big corporations are wanting to pass a new Free Trade Agreement. (The TPP is an agreement btween the U.S./Canada/Mexico with Australia, New Zealand, Brunei, Chile, Peru, Singapore,, Vietnam, Malaysia and Japan). When they talk about the benefits of the treaty they talk about increasing U.S. exports. However, if they are serious about increasing U.S. exports (and decreasing the Trade deficit), then they should be talking about increasing our own manufacturing (no pending legislation on this and any previous proposals to do so have been shut down in the House of Representatives), or closing loopholes that make it easier for U.S. manufacturers to offshore or come up with legislation to stop artificial devaluation of foreign monetary units. No, nothing like that. The only possible increase of U.S. exports by the TPP would be agriculture/food, which is why this treaty is backed by Big Agriculture, Inc. One of the troubles with getting this agreement signed is the biggest player of the TPP, Japan, is resistant in accepting steroid-infused, Growth Hormone-injected, antibiotic-fed American meat – unlike us, not-so-particular, Americans. You might think, maybe there is a tiny bright light – like if they dropped the import tax on Japanese cars, they would be more affordable. Sorry, they nixed that one, they would still keep that one import tax.

The TPP is really much more than the Free Trade Agreement, but for jobs and the economy, Free Trade component is the most important issue for most Americans. And if history is any indicator, Free Trade Agreements always cause a loss of U.S. jobs. If Congress could say that the TPP would cause a net increase of American jobs, then I am in.

Do you think that another Free Trade agreement is such a good idea? Many Democrats are against the TPP. And many want the “fast track” – where there is no public discussion of this secret agreement allowed before voting – is derailed (see top link).

NAFTA at 10: Lessons from Recent Studies, by The Congressional Research Service, 2004

Graph of US Manufacturing jobs

Offshoring and Job Loss of U.S. Workers – Congressional Research Service, January, 2011

U.S. Jobs Lost to China 2001-2013 by Economic Policy Institute

3billion deficit with Korea

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