By ERNEST F. HOLLINGS, former U. S. senator
2010 -- I thought my begging President Obama for an industrial policy
to make the United States competitive in globalization was futile - until
this morning. In this morning's The Wall Street Journal (2/8/10) on the
lower right-hand corner of the Op-Ed page appears the headline: "The
U. S. Needs An Industrial Policy." Thank the Lord for the author,
John Hofmeister, former President of Shell Oil Company.
When my friend, John McCain, told the Michigan automobile workers in the Presidential campaign that their jobs were not coming back, I knew then John didn't understand globalization. Globalization is nothing more than a trade war with production looking for a cheaper country to produce. And BMW automobile jobs had already "come back" in South Carolina; Mercedes Benz in Alabama; Nissan in Mississippi; Honda in Tennessee, and Toyota in Kentucky.
in the trade war was so fierce that the enemy had already invaded the
United States with its production and jobs. Germany, with a 19% value
added tax that's rebated at export allows Mercedes Benz to ship the engine
and parts from Germany at a cost of 4%, making its U. S. production 15%
cheaper than any Detroit production. These automobile jobs were brought
back by each state's industrial policy. For example, South Carolina has
just packaged an industrial policy of over $900 million to have Boeing
produce the Dreamliner in South Carolina. This is the frustration in Massachusetts
and over the country. States are bending over backwards to attract investment
and jobs while Washington does everything possible to get rid of the jobs.
Washington loves to require business to comply with labor rules, safety
rules, environmental rules, a high standard of living, but it refuses
to protect its environment, economy and high standard of living, forcing
U. S. manufacture to off-shore its production and jobs. As Hofmeister
relates: "The rest of the world actively promotes its core industries."
Washington stimulates tax credits for small business and welfare to keep
teachers and firemen employed, but opposes promoting "its core industries"
by engaging in the trade war for investment, research, technology, development,
production, and jobs.
indolence amounts to an industrial policy for China. Its failure to enforce
our trade laws; its outright subsidizing the off-shoring of jobs; its
failure to compete with a value added tax, forces Corporate America to
off-shore. Any United States manufacture that can readily be off-shored
will go and produce in China and export its production to the United States
cheaper than the U. S. production. It's gotten so that one can't manufacture
for a profit in the United States.
This first year of the new century found her worth twenty-five billion dollars more than her nearest rival, Great Britain, with a gross national product more than twice that of Germany and Russia. The United States was already so rich in foods and services that she was more self-sustaining than any industrial power in history.
end of World War II, the United States was the only country with
Cancel the exemption for off-shore profits as President Obama called for in his State of the Union, and make it a 5% VAT with the added 2% paying down the debt. Those wanting to reduce the deficit will join in support. Don't wait for production to go bankrupt like GM, but once production is endangered impose import quotas and tariffs under Section 201 of the Trade Act. Today, the United States can't go to war except with supplies from foreign countries. Activating the Defense Production Act of 1950 as reauthorized last year will create millions of jobs. Get President Obama to impose a 10% surcharge on imports like President Nixon did in 1971. An industrial policy like this will get Washington rebuilding our economy.
People wonder why Washington does nothing. It's because business doesn't want its taxes cut making Washington find a war that's not "necessary."
Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of the recently published book, Making Government Work (University of South Carolina Press, 2008).
© 2010, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
About Fritz Hollings
Ernest F. Hollings served the public for 56 years -- 38 years in the United States Senate and as South Carolina's governor, lieutenant governor and a member of the S.C. House of Representatives.
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