Perhaps I’m just getting old and grumpy, but this presidential campaign seems particularly vacuous.
Take the squabble over outsourcing that has taken over the debate.
This sorry saga actually begins with Mitt Romney claiming that, under President Barack Obama, China has cleaned the United State’s clock in trade and he would get tough with it if elected.
Every presidential challenger since Bill Clinton has vowed to get tough with China if elected. And when elected, every one has turned into a pussycat.
If Romney is elected, it is to be expected, and hoped, that he would do the same. If Romney actual did what he says he would do regarding China, the U.S. manufacturing and retail sectors would openly revolt.
The reason tough-talking presidential candidates wilt when taking office is because there are too many large unintended consequences to the kind of aggressive action candidates without actual governing responsibilities can casually threaten on the campaign circuit. And because, more than any other country in the post-World War II era, China doesn’t care what the U.S. thinks. It’s not a country over which the U.S. has much influence or leverage.
Lately, Obama has been trying to make a very big deal of Bain Capital, which Romney founded and led, investing in companies that allegedly outsourced American jobs to foreign countries, including China.
There has been a lot of unproductive back and forth about whether Romney was calling the shots at Bain when these investments were made. But in a sane world, this would be a huge yawner.
Bain is an investment company. I can’t imagine there is a single U.S. investment firm that hasn’t made big bets in emerging markets. The growth in emerging markets was, and is, the economic trend of our time.
Nevertheless, the Obama campaign calls Romney the outsourcer-in-chief. Romney’s campaign responds that it’s really Obama, because of all the stimulus money that went to foreign firms and operations.
Now Obama is clutching a silly study that purportedly says that Romney’s corporate income tax reform would produce 800,000 jobs in foreign countries and none in the United States. That’s supposedly because Romney would eliminate U.S. taxes on foreign earnings for U.S. companies.
That happens to be the norm among developed countries. The United States stand virtually alone in taxing money not earned domestically. However, the U.S. defers the taxes as long as the money remains deployed in other countries, creating a disincentive for repatriating the earnings.
Romney’s proposal to eliminate taxation on foreign earnings is hardly unusual or extreme. In fact, Obama’s own debt commission recommended the same thing.
Instead, Obama proposes that a minimum tax be imposed on the foreign earnings of U.S. corporations irrespective of whether they are repatriated. In other words, he wants to put U.S. firms at a competitive disadvantage in foreign markets. How that would create jobs in the United States is unclear, to put it generously. The evidence suggests that the success of U.S. firms in foreign markets creates domestic jobs.
The loss of manufacturing jobs in the United States has been a dislocating experience. One of the major bridges to the middle class for those without a college education has been eroded.
But blaming trade or those who invest in emerging markets is neither accurate nor productive.
The United States continues to make and export more stuff. Manufacturing exports have steadily grown at a healthy pace. Technology innovations simply allow us to do it with far fewer people. And our imports have grown even more rapidly than our exports.
That’s not surprising, since the U.S. has the most robust consumer market in the world. Nor is it likely to change, unless there is a significant restoration of a savings ethic in this country. Neither candidate is talking about that, however, since it temporarily would create slower (but more sustainable) GDP and job growth.
The emergence of a large, state-directed economy such as China in international trade and the dislocating effect of the loss of American manufacturing jobs are big issues.
The discussion of them in the presidential campaign is small.
Source Article from http://www.azcentral.com/members/Blog/RobertRobb/166835
