Viewpoint, Vol. 4-Trade Talk....

October 31, 2014


.....Picking winners and losers by our trade negotiators is Un-American!  A continuing discussion by my friend Bob Johns....a true Champion!

Our Trade negotiators job is to provide open markets and a level playing field on which we all compete. Make no mistake about it, they have FAILED MISERABLY over the last 40 years.

[by Dan DiMicco | October 30, 2014 | dandimicco.com}

The last volume discussed team leadership and used a “seasonal” analogy to illustrate key points.  In the trade arena we’re either dealing with intended or unintended consequences of leadership that goes into the game knowing that it will be creating winners and losers.  That trade negotiators are able to “pick” winners and losers in the private sectors via what and how they negotiate is a topic unto itself.  In our view that is not the function of the government, rather the government that represents its taxpayers should be negotiating in their best interests. 

In the process of playing so many losing games we’ve developed programs to cushion the fall for those involved in “losing” industries.  The area where I live exemplifies those industries that became losers in trade – principally textiles and furniture and the myriad of small companies supplying those industries with maintenance materials, plant related services, machinery, raw materials, lubricants, etc., etc.  The relief scheme that developed from a plethora of bad trade deals was the Trade Adjustment Assistance program, or TAA.  The short description is that this program provides benefits for those displaced by the consequences of trade.  Because our trade negotiators create those consequences by ignoring the principles of fair trade and fail to recognize all the games that are played such a program is deemed necessary to somehow compensate those whose jobs have been traded away.  Never mind that issues like currency manipulation and border taxes skew the game to near impossible odds for many US manufacturers.

But re-education programs, sadly, often miss the mark.  When I look at the courses offered at local vocational schools and community colleges the typical offering includes auto repair, landscape gardening, accounting, manicuring/cosmetology, medical assistance, language, etc., etc.  90% of the courses offered at one large community/vocational institution are service related.  Few are directed at training that would serve industry should jobs ever come back or relevant jobs that still remain.

Further, those business courses that are offered fail to recognize that the office functions substantially left the country and this area along with the manufacturing operations.  So did the skilled jobs.  So did the supply chain of manufacturers supplying an industry.  There has been a disconnect in retraining versus job reality for about two decades – ever since China decided to launch a major mercantilism based trade war on the west through a massive currency devaluation in the early 1990’s.  Noted economist Peter Morici has written about this frequently.  Only recently is there evidence of cooperation between education and remaining industry in my area.   

A couple of quick examples to illustrate how and why we’re losing a generation of skills:

·         A local boat and furniture repair operator lost his job as a plant supervisor in a furniture plant when it closed and shifted production to China.  His wife was a plant engineer.

·         Another man is now a barber.  He was the environmental/safety coordinator for a local furniture plant.

·         Yet another was an automated systems maintenance man.  He drives a delivery truck today.

·         Yet another was a tool maker.  He works for a local lawn service today.

While it has taken a long time for educators and businesses to work cooperatively (this is not universally true as some areas have been ahead of the issue) the bigger issue is why programs like TAA start in a vacuum when bureaucrats in DC know they’re creating massive sector unemployment and shifts via failed trade policy.  There is no coordination between those negotiating away sectors of the economy and those who have to deal with the aftermath.  The failure of bureaucrats in DC to manage much of anything is pretty evident given the evidence of current events.  Why should we expect anything different in assistance programs?

But the real “elephant in the room” issue is why bureaucrats in DC are even allowed to pick winners and losers in the private sector through their “efforts.”  Ignorance of (or worse, deliberately using for personal gain) the realities of managed trade today is practiced by legislators, all too many in the executive branch and obviously by those tasked to actually negotiate trade deals.  Begs the basic question, did you elect your representative/senator/president to eliminate your livelihood?  It is a question people need to ask themselves and, based on voting records, their elected officials.  At the moment we have unelected minions of those officials picking winners and losers in whole industries and, by association, communities and regions of the country.

Brings to mind a great Pogo quote (for those old enough to remember that comic strip….).

Next task – tracking down where our key influencers of trade policy come from and where they go to after their tour of duty in trade has ended…..  A work in progress but important to understand.

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