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 Richmans' Trade and Taxes Blog

Globalization Has Been a Disaster for U.S. Manufacturing and U.S. Workers
Raymond Richman, 8/11/2015

It is time to end the globalization foolishness begun by Pres. Woodrow Wilson and executed by Pres. Franklin Roosevelt.  The former created the League of Nations and the latter, the United Nations, a much more serous subversive entity. Globalization has reduced the United States from its status as the world’s leading creditor to the world’s leading debtor, reduced its status as the world’s leading manufacturer to second place to China, cost the US millions of manufacturing jobs, caused the loss of millions of American jobs, and caused real wages of American workers to stagnate. The latest trade statistics show that the trade deficit in July was $43.8 billion but the details are even worse for American workers. The trade deficit on goods was $63 billion, an annual equivalent of about 6 million manufacturing jobs. The burden borne by US workers who lost their jobs can be conservatively estimated at $300 billion.

We’ve created huge international bureaucracies that are expensive to the American taxpayer and what they do that is worth doing can be done by agencies of the US government at much lower cost. Here is how much some of them cost us:

In 2012, the US contributed $7.5 billion direct to international organizations. This does not include the Department of State’s own Agency for International Development. The principal   beneficiary was the UN which received $637 million in support of the UN itself plus an additional $75 million to UN’s Capital Master Plan or 22% of the cost of administering the UN, plus contributions to dozens of UN entities. This does not include the dozens of UN programs, some of which are listed below. Where possible, the list includes the principal contributions of the US to all international agencies and in some cases the proportion of the budget of the organization financed by the US contribution. Where no percentage appears, one can assume that all or nearly all of the cost is borne by the U.S.

UN Secretariat, $637 million (22%)

UN Capital Master Plan, $75 million (22%)

UN Peacekeeping, $2.1 billion

Inter-American organizations, OAS $48.5 million, 59%

Pan Am health organization, $63 million

Organization for European Cooperation and Development, $102.2 million

NATO, $71 million  22% (excluding US armed forces)

World Trade Org $26.9, million, 22 %

Total to this point: $3.7 billion

Special Voluntary Programs        

Common market to East and Central Africa, $47.4 million

Food and Agriculture Org $106.8 million                    “

International Organization for Migration, $199.1 million

Joint UN Programme on HIV/AIDS, $49.8 million

United Nation’s Children’s Fund, $422.2 million

United Nation Development Program, $29.3 million

United Nation’s High Commissioner for Refugees, $696.7 million

United Nation’s Relief and Works Agency, $253.6 million

World Food Program, $1.3 billion

World Health Organization, $222.4 million

Total Special Voluntary Programs  $3.7 billion

Total $7.5 billion

      (Source: Dept of State, Report to the Congress of International Contributions for the fiscal year, 2012.)

The $7.5 billion paid out is only a portion of the costs of globalization.

Much greater costs are the result of trade agreements the US has entered into with the World Trade Organization, with China, the North American Free Trade Agreement (NAFTA), Korea, and others. The trade deficits incurred with our trading partners as a result of these agreements converted the US, as we noted above, from the world’s leading creditor nation to the world’s leading debtor nation.

During the five years from December 2010 to December 2014, foreign holdings of debt increased by $2.5 trillion to approximately $6.2 trillion. During the same period, total publicly held debt increased by approximately $5.2 trillion to $13 trillion. So in December 2014, foreigners held 47.5% of the publicly held debt. Interest on the debt paid to foreigners in 2014 was $105.8 billion.

In place of globalization, organizations like the G-8 and G20, which meet regularly, could replace most of the international institutions listed above without creating massive bureaucracies, like most of those enumerated above.

A 2012 study authored by researchers at the Breakthrough InstituteBrookings Institution, and World Resources Institute[31] estimated that between 2.009 and 2014 the federal government will spend $150 billion on clean energy through a combination of direct spending and tax expenditures (subsidies at taxpayer expense). So-called renewable energy, mainly wind and solar energy) accounted for the largest share of this expenditure, 32.1%, while spending on liquid biofuels will account for the next largest share, 16.1%. Spending on multiple and other forms of clean energy, including energy efficiency, electric vehicles and advanced batteries, high-speed rail, grid and transportation electrification, nuclear, and advanced fossil fuel technologies, will account for the remaining share, 51.8%. A how has this expenditure reduced the prospect of global warming? Not a whit¸ nothing at all! What a waste!

Pres. Obama recently received fast-track authority to negotiate a free trade agreement with a number of Asian Nations bordering the Pacific Ocean. Most Americans are unaware that it creates an additional international organization dedicated to foolish anti-climate change policies. It is not just another free trade agreement. We seem to be dedicated to national suicide.

In our book, Balanced Trade (NY: Lexington Books, 2014), we say that free trade is an ideological position and is not supported by economic theory. What theory does support is free and balanced trade.

Globalization has resulted in a consider\able loss of U.S. sovereignty and cost Americans trillions of dollars, particularly American manufacturing workers. Isn’t it time to rethink our international commitments?   

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Comment by M, 8/12/2015:

The price for the offshore yuan declined (2.5%) to 6.2887 per dollar. A weaker currency will boost China’s economic growth by helping China’s exporters lower prices.

ALL Presidential Candidates Should discuss the scaled tariff as the most appropriate American response to the current trade war.

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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]