In 2004, I had campaigned for President in Louisiana’s Democratic primary for the sole purpose of advancing a trade proposal which I called “employer-specific tariffs”. If I had one particular issue to raise in the Senate campaign, it should be something like that. The U.S economy was in danger. Voters could relate to the job threat. I would make trade protectionism the main plank in my campaign platform.
My resolve was bolstered by an article in the International Herald Tribune that I had read while traveling in Asia in mid December 2007. Titled “The Yuan is not the Problem”, it was written by an economics professor at Ramapo College in New Jersey named Behzad Yaghmaian. He had recently been in China studying its manufacturing facilities. The gist of his argument was that forcing the Chinese to deflate the value of their currency would not solve our nation’s trade deficit because the United States had lost its manufacturing base in many industries. A weaker dollar relative to the yuan would not bring back U.S. production but force us to buy from other foreign producers.
I corresponded with Professor Yaghmaian by email. He did not have any proposals to reduce the U.S. trade deficit other than to encourage more travel to our country by well-heeled Chinese. However, his analysis of the problem was similar to mine. I appreciated finding a kindred spirit. We viewed trade in much the same way.
In my view, the trade imbalance could only be solved by tariffs. That made me a “protectionist”, I suppose. However, free trade was more a religion than an economic policy position. Free-trade ideologues, ensconced in economics departments of our universities, were saying it was a fallacy to disagree with them. They were saying that the counterproductive Hawley-Smoot tariff of 1930 proved that imposing tariffs would be a disaster.
Nonsense, I thought; a tariff is only a tax. We would not have trade wars between nations because the nature of trade has changed. No longer are the nations of Europe or Japan pitted against the United States, each supporting its own manufacturing firms. These firms are now global. They each have foreign subsidiaries with a claim to government support in those nations. The multinationals, I thought, were now playing a game to produce goods with cheap labor in underdeveloped countries and then sell the produce in the markets of developed countries. Free-trade policies guaranteed that this game could be played without government interference. That was the new model of trade, and it would not work. Witness our huge trade deficit.
The standard solution for our apparent trade problems was to hope that, in time, labor unions would arise in nations such as China to demand higher wages. On the other hand, union organizers in Colombia were being murdered by the score. Clever multinationals were closing down factories that had become organized and were moving their operations to new locations. A tariff imposed by the U.S. government would not allow the multinationals to profit from their bad labor practices. These companies would have to pay for the privilege of selling their cheaply produced goods in the United States. The tax was inescapable.
What kind of tax? I favored an “employer-specific tariff”. It was a concept that I had developed in an article for a Green Party publication, “Synthesis/ Regeneration”, published in the spring of 1993. Such a tax would not be levied on goods imported from certain nations, but on goods produced and shipped by certain companies. It could, in fact, be a factory-specific tariff.
This tariff would have a flexible rate. Knowing the rate of pay in a factory, work hours, number of units produced, etc. from annual audits, one could calculate a tariff rate that would equalize labor costs between costs in this factory and what it would cost in the United States with a U.S.-sized wage. Whatever cost savings could be achieved from the lower wages, the same per-unit cost could be slapped on the product as it entered the United States to be sold here. Maybe the tariff would cover all of the cost differential, or maybe only part, but this would at least be a way to deal with the root of the trade problem which was not currency rates but substantially lower wages in the exporting countries than in the United States.
I also saw this kind of tariff as the foundation of an international effort to improve wages around the world. The lower the wages in a factory, the higher the tariff would be. And the higher the wages, the lower the tariff. Employers would therefore feel less pain if they raised wages. The Chinese government might not object if wages rose for Chinese workers employed in factories that export goods to the United States. They might not object if manufacturing plants supplying our goods did less polluting of their water and air. Our tariffs need not spark a trade war.
The key to it, though, was the level of work hours. Reduced work hours meant that employment levels could be maintained even if machines displaced human labor. As nations industrialize, there is an appropriate level of working hours. Industrially more advanced nations can afford shorter work hours. But all need to join in this process to maintain high global employment. The nations of the world could cooperate in making sure that the progress toward lower hours proceeds on schedule. Tariffs would be the mechanism to punish national governments that tried to gain a trading advantage by keeping hours long. Even - no, especially - the United States might become subject to international trade sanctions. We were increasingly abusing labor.
Meanwhile, in the spring of 2008, a primary contest was raging between two Democratic presidential candidates, Barack Obama and Hillary Clinton. Both criticized NAFTA. Both expressed concern about America’s eroding manufacturing base. Yet, it seemed to me that neither candidate presented a clear picture of an alternative. Obama said he would eliminate tax breaks to companies that shipped jobs overseas. He implied that the tax code rewarded outsourcing.
If it were only so easy! I thought that the problem was not the tax code or China’s alleged currency manipulation but the fact that workers in China and other low-wage countries are paid so much less than in the United States. And our “experts” implied that the United States could again compete in global markets if we became a “brainpower” economy and invested in education. It was the educators saying such things.
Why not put the ideas out there?
The root of the problem, I thought, is that no one has advanced serious proposals for an alternative trade policy. If we do not like free trade, what would we prefer to have in its place? There must be thoughtful persons out there with trade-related suggestions on how to save jobs. My mission was to find them and invite them to a conference. Proposals for alternatives to the free-trade orthodoxy might be presented here. Professor Yaghmaian might deliver the keynote address. We could videotape the conference and post the tapes on the Internet. Then whoever is elected President in November would have something else to look at. Free trade would not win by default.
I also thought that a political campaign was an appropriate venue for such discussions. The object would be to find persons of various political persuasions with ideas challenging free trade. I, as an Independence Party candidate for U.S. Senate, would be one such person. I drew up a list of trade policy makers from one end of the political spectrum to the other, drawing upon my recollection of persons and groups who had opposed NAFTA in the early ‘90s.
In a letter dated May 14, 2008, I proposed to those persons that a day-long conference be held in Minneapolis between August 7th and August 20th for the purpose of presenting alternative trade proposals. They would be presented one after the other, with a brief discussion afterwards. This meeting would be scheduled shortly before the Democratic and Republican national conventions. Such an event would occur in the context of the 2008 presidential campaign. I identified myself as an Independence Party candidate for Senate.
Some whom I contacted by mail were: John (“Rick”) MacArthur, publisher of Harper’s magazine; Pat Buchanan; Ralph Nader; Jesse Jackson’s organization PUSH; Kevin Phillips; Paul Craig Roberts; Ross Perot; Cynthia McKinney, presidential candidate of the Green Party; Chuck Baldwin, presidential candidate of the Constitution Party; Sherrod Brown, a U.S. Senator from Ohio; Tom London of the Alliance for Responsible Trade; Scott Hoffman of Citizens for Global Solutions; Jeff Faux of the Economic Policy Institute; Jim Benn of the Federation for Industrial Retention and Renewal (FIRR) in Chicago; Bama Ahraya of the International Labor Rights Forum in Washington, D.C.; Ruth Kaplan of the Alliance for Democracy in Boston; and Manuel Perez of the Institute for Policy Studies in Washington, D.C.
I also made telephone calls to local people knowledgeable about trade. David Morris, a trade expert, was vice president of the Institute for Local Self-Reliance in Minneapolis. I had attended a fundraiser for Mark Ritchie’s campaign for Secretary of State at his home in 2006. Alicia Ranney was the part-time staff person for Minnesota Fair Trade Coalition, an organization that I had helped to found in 1991. Alexandra Spieldoch was a trade specialist with the Institute for Agricultural and Trade Policy. Mark Ritchie, now Minnesota’s Secretary of State, had founded this group in the 1980s and had been its executive director for many years. I was familiar with those groups from my involvement in the fight against NAFTA in the early 1990s.
My first telephone call was to David Morris. Identifying myself as an Independence Party candidate for U.S. Senate, I asked if I might meet with him briefly to discuss an idea for a local conference on trade policy. His response was “no”. No, he would not meet with me because, in his opinion, the Independence Party candidate for Governor in 2006, Peter Hutchinson, had taken votes away from the Democratic candidate, helping Republican Governor Tim Pawlenty win reelection. Morris was a Democrat. He would not meet with me, and that was that.
I also placed calls to Alicia Ranney and Alexandra Spieldoch, who were more flexible in their views. I met both in person.
The meeting with Ranney took place at the Second Moon cafe on Franklin Avenue on Monday, May 19th. She was relatively new to her position with the Minnesota Fair Trade Coalition. Ranney said that, when I had a concrete proposal for a conference, she would bring it before the MFTC’s board to see what support, if any, might be given. I also probed her to see if she knew of alternative trade proposals.
I expressed disapproval of how the trade issue had been “moralized” - particular national governments had been demonized - and said trade should be approached by a new system of tariffs applied uniformly and without rancor. Ranney disagreed, citing the murders of labor organizers in Columbia. I reached the conclusion that there was not much out there along the lines of my thinking. The anti-free traders were focused on fair-traded products and such things. We were all such ethical people!
My meeting with Alexandra Spieldoch took place in the offices of the Institute for Agricultural and Trade Policy on Clinton Avenue on Friday, May 23rd. Spieldoch was an experienced and knowledgeable person on trade issues. She said that the IATP had previously sponsored such a conference with a good result. Yes, her organization might be willing to help with a conference such as what I was proposing. On the other hand, public attention was shifting to issues such as Global Warming. It was increasingly difficult to find funding to study trade.
Spieldoch mentioned some groups that I ought be be contacting and also suggested that I call the Secretary of State’s office to see if Mark Ritchie might be available for lunch. (I did call on a day when the telephone system was down; subsequently, my attention was diverted elsewhere.) She said she wanted to be kept informed of progress with my plans. It was a good meeting.
As the weeks went by, no one responded to my letter. I spent a morning on the telephone calling some on the list. I spoke, for instance, with a Mrs. Turner in the International Trade division of operation PUSH. She said that Jesse Jackson was out of the country. She would take a look at my website and get back to me. I was unable to reach her in subsequent calls.
I also spoke with a woman named Barbara at Harper’s magazine, attempting to reach publisher John MacArthur, who had written a book, “The Selling of Free Trade”. This was about how President Clinton supported NAFTA in exchange for campaign contributions to Democrats from Wall Street interests.
A few days later, MacArthur called. While he thought the idea of a conference was sound, he thought my proposal to hold the conference in August was unrealistic. It would be better, perhaps, to wait until after the November election when attention would shift from campaigning to considering policy options. John MacArthur was also interested in the fact that I had written a book with former U.S. Senator Eugene McCarthy, whom he called a friend. I sent him a copy of that book.
I also had a response from Paul Craig Roberts, a Treasury department official in the Reagan administration. He wrote in an email reply to a message that he would gladly participate in such a conference but he could not stand the idea of going through airport security to get to Minneapolis. Here was a man of intellect and humor expressing wry resignation at what was happening to our country.
Toward the middle of June, my attention was shifting to my own Senate race. Some such as Alexandra Spieldoch and John MacArthur were supportive of the conference proposal, but most were apathetic at best. Perhaps I was trying to pull off an event beyond my capability. The fact that I would soon be a candidate with the Independence Party antagonized political partisans and may have muddied the waters with others. So perhaps the project was ill-conceived. My energies needed to be placed elsewhere.
Therefore, on August 10th, I finally pulled the plug on the trade conference. I wrote all those who had received letters in May that the project was cancelled.
to next chapter