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 Richmans' Trade and Taxes Blog

Congress needs to seek out testimony from those not tainted by foreign donations
Howard Richman, 9/19/2014

Jesse has already published two postings about the New York Times expose (Foreign Powers Buy Influence at Think Tanks). I especially found interesting an incident involving the Japanese government's use of a think tank called the Center for Strategic and International Studies.

The Japanese government contributed to that think tank, which organized an event promoting the Trans Pacific Partnership (a free trade agreement that would include both the United States and Japan). Then a scholar from that think tank testified before the Senate Foreign Relations Committee:

[A]t a Senate Foreign Relations Committee hearing later that month, Matthew P. Goodman, a scholar at the center, testified in favor of the agreement, his language driving home the very message Japan’s lobbyists and their congressional allies were seeking to convey.

The agreement was critical to “success not only for the administration’s regional economic policy but arguably for the entire Asia rebalancing strategy,” Mr. Goodman said.

In our opinion, Goodman was completely wrong. We have predicted (Fast Track to a Bad Deal) the opposite of a "rebalancing" effect, as far as trade is concerned. The Trans Pacific Partnership, like its model the Korea-US Free Trade agreement, would enable Asian mercantilism and thus worsen the U.S. trade deficits. 

Congress may be making its decisions based upon deluded testimony from think tanks that are bought and paid for by foreign interests. There are ways to avoid such errors:

  • Jesse proposed increasing funding for congressional committee staff, to reduce the reliance upon possibly-corrupted think tanks.
  • I suggest that congressional committees seek out testimony from uncorrupted think tanks, such as ours. 

The English speaking countries, especially the U.S. and Britain, came out of World War II as the dominant countries of the world. With many allies, they then won the Cold War. They expanded democracy and tolerance around the world.

Then they lost the economic war with mercantilist Asia. They let Asian governments, primarily Japan and China, force loans upon them as part of a strategy that manipulated exchange rates in order to steal industries. All of the English speaking countries simultaneously lost jobs and investment in their manufacturing sectors. In return for short term boosts in consumption, on Asian credit, they traded away their futures.

Would an economically thriving Britain be riven by a secessionist movement? Would barbarism be expanding in the Middle East if the English speaking countries were still thriving?

It's long past time that the United States government reject the advice of those who tolerate imbalanced trade with mercantilists. We have proposed a mechanism that would force U.S. trade into balance: the Scaled Tariff.

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Comment by DJF, 10/29/2014:

Its not just foreign powers but corporations which make most of their money on international trade. From the numbers I have read the US international trade was approximately 8% GDP in 1970 and approximately 30% GDP today. This has been a huge boost to international financiers whether so-called US ones like Goldman Sachs or ones whose headquarters might be in some other country. Every time such an international trade happens then the international financiers get a fee, something that does not necessarily happen when domestic trade occurs

So of course whenever Goldman or others show up in Washington they recommend policies that increase international trade. This applies to their flunkies at the World Bank, IMF or other talking head who will reliably push the same agenda. When was the last time you heard any of these people talk about polices that increase domestic trade? Even though according to their own theories domestic trade is just a wealth producing as international trade. However when your specialty is being the gatekeeper for international trade you want as much trade going through your gate not a domestic gate.

If the international financiers could arrange it they would want Idaho to buy all its potatoes from Ireland and Ireland to buy all its potatoes from Idaho just so the financiers could handle 100% of the potatoes trade and collect fees on every step involved. That is why their solution to every economic problem is to increase international trade.

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]