Gabriel M Key  

Hey there,

Over the weekend I got into a fairly deep conversation regarding the future of the US and international trade.  My conversation partner (CP – identity to remain anonymous) felt that Senators Obama, Clinton and much of the Democratic leadership in both the House and Senate were correct in their somewhat protectionist stance against international trade.  Simply put, the argument was that by protecting the US economy form imports, we protect US markets from competition and create room for US goods, ultimately protecting US jobs.

While there is a simple logic to this argument, it really isn’t accurate.  On another day I will take a look at how increased opportunities for exports allows US companies to sell more and competition from imports compels US companies to be efficient (maintain lower prices) and provides much motivation for US companies to continuously innovate.

Today, lets take a look at how US policy regarding education is important to US jobs and the US economy remaining competitive.  If each child within the US were to be provided a base line of education incorporating computer fluency (or at least comfort), 12th grade level fluency in English (reading and writing), basic research and composition skills, and strong math skills, then the question of if and how the US will remain competitive would not be a dominant question in the current elections and political maneuvering.  

To illustrate how important education is to a developed or developing country consider the following quote from the Director of MS Ireland recently stated:
•    “Ireland needs to concentrate on significantly increasing long-term competitiveness through investment in education, increasing the productivity of our public and private sectors, while maintaining a pro-business environment.”  -
•    “Education underpins all of Ireland's achievement. To be a world-class economy and society we need to have a world-class education policy to compete in the race to the top. Increasingly education will be a key factor in our capacity to compete and to flourish in the global market. Education is not just an economic tool. It is preparation for life. But the quality of life we can hope to enjoy individually and as a community will be increasingly determined by our educational attainment. We need a generation of people who are equipped and qualified to be leaders in the twenty first century knowledge economy.”
•    -http://www.finfacts.ie/irishfinancenews/article_1012665.shtml



If Ireland’s economic future depends upon a well-educated workforce – and this is the supposed Green Dragon – what does that say about the importance of education to development and remaining competitive?

Where the rubber of partisan politics, public policy, economic theory, and political science hits the road of real life. An honest and impartial discussion of life's realities colliding with the designs behind the government policies and actions we all must live with.

Thoughts on the price of oil:

“each time the dollar falls 1%, the price of the barrelrises by $4, and of course vice versa.” – Chakib Khelil, as quoted in The Economist, May 3, 2008 page 9.

So, right now we have a dollar at near historic lows,intense speculation about the supply of oil form the Middle East and other oilexporting countries, increasing demand from Brazil, China, and India, and annual pre-summer price hikes caused by Wall Street speculation based on expected increases in demand over the summer. 

Still think “Big Oil” is causing the current prices?

Ask yourself, what type of car do you drive, how often andhow far is it driven, and is it absolutely necessary for you to drive that car,that far, or that often?  This isyour part of the nation’s demand.

Also ask yourself, how much credit, personal, or home-equity dept do you have?  How muchdo you have in relation to any savings? Most of us have very low savings andrelatively high dept; this is a part of the reason why the dollar has droppedsome of its value. 

The current oil prices are not an individual problem solved with accusations, finger pointing, or simply waiting for others to make the difference.  It is a national problem affecting us all today, tomorrow and into the future.  We all must make changes in our daily life to see change benefiting us all.

What is happening on the Hill?  The Democratic leadership in the House asserts that it willoppose the Colombian and Korean Free Trade Agreements until certain provisionsor laws are established to further protect American jobs and workers. 

OK, I understand the motivation and desire to protect U.S.jobs and workers.  But, is itpossible to be so protective that people ultimately loose out on opportunitiesfor growth?

Congressman Herger (R - CA) spoke at an event hosted by theWashington International Trade Association – WITA – (http://www.wita.org) about the currentCongressional Trade Agenda.  To me,his remarks were both candid and refreshing.  Much like the Congressman, I believe continued, if notexpanded, access for U.S. exporters is one of the key elements to ensuring theU.S. economy continues to be viable and functioning now and into thefuture. 

As he remarked, opportunities for expanded internationaltrade brings opportunities for economic growth, employment, and helps keep oureconomy going.  Increased access toforeign markets allows our goods to be sold abroad. Conceptually, it is thesame as expanding into a new city or state market.  Allowing imports forces us to remain competitive.  While some companies choose to becompetitive by lowering their costs, investing in research, design, andinnovation are more sustainable ways to remain competitive in the longrun.  With such investment, U.S.jobs are created and preserved into the future.

So, why block the Colombia and Korea FTAs?  It is true some people will gain morethan others if the agreements go into effect.  But, building walls and locking everyone out is not theanswer.  It didn’t work for theformer USSR and it didn’t work for Japan in the 18^th and 19^thcentury, why would it work now?

That said, if we are going to compete and be a part of theinternational trade system, then we must ask all other trading countries tofollow the same rules and seek out appropriate discipline when the rules arebroken.  We must also make everyconceivable effort to ensure that each and every item or morsel imported intothe U.S. or exported abroad meets all appropriate standards and does not placehuman or animal life in danger.  Mostimportantly, we should be making the investments today to ensure our childrenhave the skills and resources they will need to keep the U.S. economystrong.   

May 5, 2008 – Washington Trade Daily reports President Bushaccused Congressional leaders of being “irresponsible” for delaying the vote onthe U.S. – Colombia FTA. 

“Congresswill send the wrong message to the world if it does not approve a trade pact witha close US ally, the President continued.  “I strongly urge the Congress to understand – whether it be Colombia or Panama or Korea – that we can’t be turning our backson our allies,” [the President] said.”

 

Reportedly, the House Democratic leadership is stalling thislegislation until an expanded Trade Adjustment Assistance program isestablished and a second economic stimulus package is passed. 

So, my question is: how long must this waiting game go on?

I agree completely with revising the TAA program so it is inline with the demands of a 2007 economy, not a 1977, 1987 or 1997 economy.  What that means exactly, I am not sure.  But, I can say a revised TAA shouldaccommodate “white collar” or service workers. 

I also think our elected leadership should do all it can toensure the health and vitality of the U.S. economy. 

But, at what point should our elected leadership stopplaying politics and start focusing on providing band-aids for today and ensuring a robust economy in thefuture? 

I shudder to think of the possibility that our elected leadership is trying set up the U.S. –Colombia FTA, U.S. - Korea FTA, and TAA so that it passes through the Housejust as we swing into the fall elections.  Just think, if you were running for a congressional seat or to be the next President of the United States, wouldn’t it be great to wave around a trade deal or new law and use itto show you and your party fights for the American worker?

Sadly, without programs providing long term support forinnovation, research, the growth of small to medium businesses and robust K –Post Graduate education to all Americans there will be fewer and fewer Americanworkers to defend. 

Your thoughts?