Protectionist trade policies aren’t just good for American jobs.
They’re good for national security.
As tensions heat up between the United States and China over Taiwanese independence, it’s time re-evaluate who supplies us with the goods on which we rely for daily existence.
The current “supply chain” debacle is a perfect example.
As demand for everything from food to clothing to iPhones increases, so does the pandemic supply crunch.
Before the “Reagan revolution,” the United States was the world’s chief importer of raw materials and exporter of finished goods.
But thanks to Reagan’s assault on labor unions under the guise of “free trade,” the North American Free Trade Agreement (NAFTA), the Central American Free Trade Agreement (CAFTA), and Permanent Normal Trade Relations (PNTR) with China have decimated the American manufacturing base, turning us into the world’s largest importer of finished goods.
A prime example of this is Walmart.
The department store chain founder, Sam Walton, started his “Bring it Home to the USA” initiative in 1985.
The “Made in America” mission was very popular, as PBS “Frontline” reported:
“Noting that 1.6 million U.S. jobs had been lost between 1981 and 1984, he [Walton] announces the [“Buy America”] campaign in a letter to 3,000 U.S. Wal-Mart suppliers.”
By 1992, though, around the time Ronald Reagan’s successor, George H.W. Bush, had negotiated NAFTA in time for his successor, Bill Clinton, to sign it, the “Made in America” and “Bring It Home to the USA” marketing campaigns were weakening with news of Bangladeshi children slaving away in Walmart’s factories.
NBC‘s “Dateline” ran a segment documenting “hidden camera footage of Wal-Mart stores with ‘Made in America’ signs hung over imported goods.”
As PBS chronicles:
“The program also profiles a sweater factory in North Carolina that was featured in a Wal-Mart ‘Buy America’ ad but was forced to close when Wal-Mart found a cheaper distributor overseas. Wal-Mart CEO David Glass storms out of the ‘Dateline’ interview, and according to former Wal-Mart store manager Jon Lehman, the stores are required to remove the ‘Made in America’ signs overnight.”
In 1996, Walmart opened its first supercenter in Shenzhen, China.
Walk into any Walmart now and look for anything “made in America.”
Everything is “Made in China.”
But, of course, Walmart is hardly an outlier.
Every major corporation is in on the low-wage, low-regulation, “free trade” train.
Our appliances, electronics, clothing, office supplies, automotive parts, building materials, food, and even military hardware, while not exclusively manufactured in China, are likely imported from low-wage countries.
But what happens when the supply chain from those countries breaks down, as it is now?
What happens if we find ourselves involved in a skirmish over trade, defense, or some other political brouhaha with one of those countries, particularly one as militarily and technologically sophisticated as China?
While a “hot war” with China is unlikely–not to mention a catastrophic prospect–a “cold war” could similarly spell our demise.
If we manufactured our own goods, our supply chain would be just that–our supply chain.
Our first treasury secretary, Alexander Hamilton, knew that.
Independence Day on the first year of our fully ratified Constitution, 1789, the newly formed Congress passed its first piece of legislation, the Tariff Act, which addressed the massive war debt the country accumulated from the revolution, the need for a revenue source, and a glut of imported goods.
In his “Report on the Subject of Manufacturers,” Alexander Hamilton expressed concern about protectionist trade policies’ possibility for alienating foreign nations with which the inchoate United States may have wanted to trade.
Yet he also understood outsourcing everything to those foreign nations could spell equal disaster.
He urged government intervention diversity that included tariffs and “premiums”; i.e., subsidies.
It wasn’t like it was a new idea either.
Hamilton adopted it from King Henry VII’s 1485 “Tudor Plan,” which transformed England into a significant economic engine producing fine clothing and textiles by restricting its chief export, wool, with high export tariffs, and restricting finished wool imports with high import tariffs.
Henry VII learned it from the Dutch, who got it from the Romans, who got it from the Greeks.
Adam Smith acknowledged this in his seminal 1776 book The Wealth of Nations:
“The most opulent nations, indeed, generally excel all their neighbours in agriculture as well as in manufactures ; but they are commonly more distinguished by their superiority in the latter than in the former.”
It was how we did things from 1789 to the 1980s.
China just surpassed us as the nation with the greatest wealth because decades ago it rejected neoliberalism and adopted Hamilton’s model.
We, however, continue to eschew it.
As author and progressive radio talk show host Thom Hartmann wrote in a recent piece titled “What is the ‘Wealth of a Nation'”?:
“If we are to again create real and lasting wealth in this country, we must stop depleting our wealth by shipping our remaining natural resources overseas and return to manufacturing.
“We export around $700 billion a year in cash as well as coal, iron ore, cotton, soybeans and freshly logged trees to China; they send us back appliances, furniture, clothing, computers, and pretty much everything else you see in the store. That’s our trade deficit.“
How is this a national security issue?
In 2017 and 18 alone, Chinese buyers acquired over 80,000 residential U.S. properties.
Chinese investors and the Chinese government own over a trillion dollars of our national debt.
China owns Smithfield Foods, the massive industrial meat-packing company Donald Trump ordered to continue operation during the early days of the COVID-19 pandemic, sickening scores of underpaid, overworked employees.
Foreign buyers own 30 million acres of American farmland.
If things get nasty over Taiwan, what’s to stop China from cutting off exports and dumping our treasuries?
We’d be on our knees in a week.
We must return to protectionism, which means resuming tariffs on imported consumer goods.
We must bring our manufacturing jobs back and protect them from the proliferation of cheap foreign labor.
Image credit: Ian Taylor via Unsplash
