John Stoehr CLINTON, SURPRISE POPULIST
‘Stay or pay’ could make corporations reconsider moving jobs overseas
Donald Trump and Bernie Sanders have made white working-class resentments over international trade central to their presidential bids. But neither takes the issue seriously. Ironically, the one who does is the candidate most identified with free trade: Hillary Clinton.
Trump and Sanders often blame China for taking American jobs. In this regard, they are right. Between 2001 and 2007, job growth in U.S. manufacturing was 30% lower than it would have been had Congress not passed “permanent normal trade relations” between the two countries in 2000. According to a 2013 study by economists Peter Schott and Justin Pierce, the Great Recession is partly to blame for lost jobs and lost job growth, but so is this “major change in U.S. trade policy.”
Even so, Trump and Sanders are also wrong.
THE WORLD WE LIVE IN
Lost job growth isn’t due to bad deals with China because the United States does not have bilateral trade agreements with that country. China and America are, however, members of the World Trade Organization, which writes the rules of commerce.
A condition of membership was lifting trade barriers. To influence commerce rules, and to benefit from China’s liberalized economy, the U.S. dropped tariffs on Chinese imports.
Trump and Sanders may blame trade deals for the plight of the white working class, but the real issue is a global economy. That is the world we live in and the reason President Obama is seeking congressional approval of the gigantic Trans-Pacific Partnership (TPP). It’s to the advantage of the United States, he says, to help write the rules of the global economy.
At the same time, Obama has proposed many ways of helping people who feel the brunt of the global economy, including free community college and tax credits for manufacturing communities. Nor has he stood idle while China breaks WTO rules:
In 2009, the administration slapped a 35% duty on cheap Chinese truck tires.
In March, the Commerce Department announced a new 266% tariff on Chinese steel being dumped onto the U.S. market.
A complaint made a year ago with the WTO has forced China to stop subsidizing companies exporting seafood, textiles and other goods.
Former secretary of State Clinton was for the TPP before she was against it, and she might yet be for it once again.
Contrast that with Trump, who has called the 12-nation TPP pact “insanity,” and Sanders, who says it’s “disastrous.”
‘CHIEF TRADE PROSECUTOR’
If Clinton’s wobbly on the TPP, she’s Obama’s equal in proposals to help struggling workers, and she vows to be even tougher than the president on trade violations.
She has proposed appointing a “chief trade prosecutor” who reports directly to the president, and called for tripling “the number of trade enforcement officers and build new early-warning systems so we can intervene before trade violations cost American jobs.”
She appears ready, moreover, to use tariffs to deter China’s currency manipulation.
Yet trade crackdowns and help for displaced workers are only part of a solution. Another important element is holding accountable corporations that benefit from a global economy. And it is here that Clinton emerges as the most serious candidate.
Clinton’s claim on this is a tax proposal that gives corporations incentives to invest in the USA. According to her “clawback” plan, firms relocating overseas must repay any taxpayer assistance they ever received. As Clinton told the New York
Daily News, tax relief is given in exchange for creating jobs. There was, she said, “an implicit bargain.”
Elizabeth Warren, the progressive icon, invoked the same implicit bargain while running for the Senate in 2012. Corporations are part of communities with multiple stakeholders, she said: “Part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.”
Clinton’s proposal to make firms stay or pay is good policy that is also good politics. Given how closely her views resemble Sen. Warren’s, it’s ironic that the presidential candidate most identified with free trade could be the most progressive.