Wednesday, August 04, 2010

Clueless on the economy

Today's Washington Post details new efforts by Congressional Democrats to boost job growth in the manufacturing sector. It's a story that nicely encapsulates nearly everything wrong with how our political leaders approach economic issues.

First let's begin with why this initiative is targeting the manufacturing sector, as opposed to service industries or the economy at large. Was it due to some new research on economic competitiveness? A ground breaking think-rank or academic report? Nope, it simply polls well:
The seeds of the "Make It in America" campaign were planted earlier this year, when Rep. Mark Critz (D-Pa.) won an unexpectedly large special-election victory by campaigning against tax breaks for companies that move jobs offshore.
Then in late June, House Democrats were briefed on a poll conducted this spring for the Alliance for American Manufacturing, which found that voters are anxious about the nation's mounting debt to China. Key voting blocs -- including independents and older people with no college education -- named the loss of manufacturing jobs as a top worry, the survey found.

The poll "crystallized" Democratic thinking, said Rep. Chris Van Hollen (D-Md.), who leads the political committee in charge of electing Democrats to Congress.
Then we discover that the initiative is -- par for the course in politics -- more style than substance:
Many of the ideas being promoted by Democrats to stop the slide are hardly new. House Republican Whip Eric Cantor (Va.) called the strategy "more meaningless than harmful" after voting for one Democratic proposal, a resolution to encourage packers of domestic fruits and vegetables to display the American flag on their labels.

Another measure, which last week won final congressional approval and is awaiting Obama's signature, would extend an array of existing tariff adjustments that benefit U.S. manufacturers. Previously known as the "Miscellaneous Tariff Bill," Democrats rechristened it the "U.S. Manufacturing Enhancement Act of 2010."
The initiative's key measures then are, literally, maintaining the status quo on tariffs (hooray for protectionism) and putting American flags on fruit and vegetables. You can't make this stuff up.

What's even more frustrating is that there actually are measures that Congress could undertake to assist the manufacturing sector -- namely passing outstanding free trade agreements with Colombia, South Korea and Panama. Unfortunately, that appears to be off the table as Democrats remain in thrall to unions opposed to such agreements:
Democrats are still divided on another [National Association of Manufacturers] priority: free-trade agreements with South Korea, Colombia and Panama that have been stalled for years in Congress by opposition from organized labor.
Congress in action: meaningless symbolism, poll-driven policies and the triumph of special interests over the public good.

Related: Thoughts from Daniel Griswold on the Post story here.

Update: Scott Lincicome chimes in.

2 comments:

Ben said...

Why will a free trade agreement with either Korea or Colombia improve manufacturing?

Also, your post reminded me of this story.

Colin said...

Colombia has a sizeable mining sector (biggest coal reserves in South America) and eliminating tariffs on mining equipment such as those made by Caterpillar would give them a cost advantage.

The SK FTA, meanwhile, would assist the auto sector, as it would abolish taxes in South Korea "on large cars produced in the United States" as well as reduce "car taxes that are based on engine displacement" which are thought to disadvantage U.S.-made cars.