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WHAT WE THINK
Who's to blame for job losses?

October 24, 2003 | Page 3

GEORGE W. Bush headed to Asia hoping to achieve a revaluing of the Chinese and Japanese currencies to help cut the U.S. trade deficit. He got a polite promise to look into the matter from those countries' leaders--but little else.

Democratic presidential candidates and union leaders will no doubt beat up on Bush for allowing East Asian countries to keep "stealing" American jobs--and demand tougher action against China in particular. It is true that the U.S. economy has lost nearly 3 million manufacturing jobs in the last three years. But is China to blame?

No. While Chinese exports to the U.S. have increased from $39 billion in 1994 to $137 billion today, 10 of China's top 40 exporters are U.S. companies, including Motorola and Dell. In fact, China has pulled foreign investment and jobs away from other low-wage countries in Latin America--and even from its Asian neighbors.

The point is not that the U.S. should forge a China-bashing alliance with these countries--but that the world has become increasingly integrated economically, making purely national solutions to economic problems impossible. The U.S., for example, is increasingly dependent on the central banks of Japan, China and other governments to buy government bonds that finance Washington's budget deficit.

Those governments are willing to do this to gain access to the U.S. market--but they still want to make their exports as competitive as possible. Higher restrictions on imports won't solve the problems of the weak U.S. economy--leaving aside the problem of distinguishing a Toyota vehicle built by members of the United Auto Workers in California from one built in Japan, or a Ford made in Mexico rather than Michigan.

And one reason that the U.S. trade deficit has soared is weak demand from the economies of Europe, Japan and the rest of the world. China's share of world trade today is about the same as Italy's, and its trade surplus is smaller than Japan's, Germany's and Russia's.

Nor is it the case that the U.S. is the world's big loser in manufacturing. According to a study cited recently in the Wall Street Journal, the U.S. has lost 11 percent of manufacturing jobs since 1995--compared to a 20 percent loss for Brazil, a drop of 16 percent in Japan, and a 15 percent drop in China, where many enterprises in the old state-run heavy industries have been shut down.

The big winner? Canada, which has seen a 24.6 percent increase in manufacturing jobs over the same period. One big reason: U.S. auto companies have continued to invest heavily north of the border, taking advantage of Canada's national health insurance system that makes health care costs much lower than in the U.S.

If there's no Canada-bashing, it's because the U.S. pressure on China trade has another agenda--preventing it from one day threatening American economic, political and military dominance in Asia. China-bashing is a diversion for U.S. policymakers who don't have any economic solutions except handing over tax breaks to the rich and squeezing workers.

That's why protectionism is a dead end. Workers all over the world face the same problems of a constant push to work harder for less--and international labor solidarity is the only way to defend jobs.

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