Jeff Immelt and Bernie Sanders

Sanders says that he is upset about GE’s operations abroad — as though a company that has customers in more than 180 countries should have no presence in any of them. He never mentions that we are one of the United States’ prime exporters, annually selling in excess of $20 billion worth of American-made goods to the world. Nor does he mention that our sales around the world support our manufacturing base here at home, along with the thousands of U.S. companies in our supply chain. You want to cause big problems for our suppliers — many of whom are small and medium-size businesses — and their workers? The surest way would be to pull out of those countries and lose those customers.

Source: GE CEO: Bernie Sanders says we’re ‘destroying the moral fabric’ of America. He’s wrong. – The Washington Post

While the op-ed in the Washington Post is an obvious creation of some deft public relations folks, I applaud Mr. Immelt for engaging in the debate.

At the same time, Mr. Immelt should not be disingenuous. He must grant that he has been among the most determined in his efforts to draw subsidies and assistance from the government, and that this puts him – and his company – in the crosshairs of a growing bipartisan movement to put an end to government subsidy and commercial favoritism.

The rest of us must grant that, as a company, GE has done the good things that Mr. Immelt enumerates, most notably employing lots of Americans, building new factories in the USA, making stuff that extends human life, cutting greenhouse emissions, making transportation more efficient, and exporting $20 billion of American products each year, all in the face of competition from places like China where the government coffers are wide open to local companies seeking to squash GE and firms like it.

Thus GE’s challenge is not the Senator from Vermont. It is to accept that it is operating in a new era, one in which it must face and defeat global competitors without the aid of subsidies from the American people.

Our greatest challenge is not GE – we can end corporate welfare with unity, determination, and the stroke of a pen, as we must and as we will. Our real challenge is going to be facing the onslaught of companies from places like China, companies who service a dream of a planet humbled and answerable to Beijing.

WaPo: Sanders’ Trade Policy is Deeply Flawed

“Blaming freer trade for the loss of manufacturing jobs fails to tell the much bigger story of economic transformation that has swept the world over the past several decades. Technological change, automation, productivity improvements and other factors have eliminated old-school manufacturing jobs all over the world. Mr. Sanders cannot bring back the U.S. economy of the 1960s, and it would be harmful to try.”

Source: Mr. Sanders peddles fiction on free trade – The Washington Post

I have in this space been an unsparing critic of the policies that Bernie Sanders is promising to implement if elected President. I have been particularly dismissive, admittedly without citing support, of Mr. Sanders’ efforts to articulate a coherent foreign policy.

In this first of several post that will critique aspects of Mr. Sanders’ foreign policy platform or introduce the criticism of others, I will actually step between Mr. Sanders and his critics.

In the above linked article, the editors of the Washington Post offer their rebuttal to the underlying logic of Senator Sanders’ proposed foreign trade policy. It is an eloquent and poignant critique of the protectionism that oozes from Mr. Sanders’ foreign policy.

And yet I find myself siding against the Post on this item.

The Ebb of Globalism

For most of my life I have been a trade globalist, endorsing the idea that freer trade is broadly beneficial. Yet even as a callow young B-school student I understood that there are limits to the macroeconomic assumptions that support free trade. History has proven that international trade systems are only as good as their most abusive participant. As long as everyone agrees that the system is more important than the needs of any individual nation, the system will thrive. But when enough participants – or one participant of sufficient scale – begin to game the system, the game becomes beggar-thy-neighbor again.

While the Bretton Woods free trade system managed to address a constant patter of abuses, it appears increasingly unable to contain the challenge posed by China – a single, giant global player determined to game the system, and large enough so that in doing so it gives lie to the system itself.

We thus appear on the verge of an era where global free trade is replaced by a resurgence in protectionism and the replacement of the WTO with a series of bilateral accords and multilateral trade arrangements.

Against that background, the Washington Post’s protest that protectionism will not bring back manufacturing jobs is correct. Unfortunately, the Post doesn’t address the larger question: is trade free enough? Or is it too free already?

Regardless of your reaction, the answer is that the time has come for us to have this debate in America. The effects of trade policy are felt by all – it is no longer sufficient to allow the matter to be handled by elites. If the case for trade is compelling for America, let’s make it. Let’s demonstrate that the benefits will redound to the least prosperous among us as well as the affluent.

 

Breaking the Pelican State

The Louisiana-is-good-for-business story of the past eight years appears to have been largely built on the state paying corporations to do business here. That “look forward, don’t blame” strategy is exactly what the national GOP wants us all to do regarding the Bush years, because it’s what they’ve been doing.

Source: What Jindal Did To Louisiana | The American Conservative

Louisiana was broken by corporate welfare and tax give-backs. It will not be the last state to suffer such fates.

It is equally interesting to note that this story comes from The American Conservative. The GOP had best take note: conservative ideology is in headlong retreat from its support of tax breaks and corporate welfare. Supporting such policies is increasingly risky, if not downright foolhardy.

I did not support the dismantling of a social hammock only to have those funds turn into an easy chair for a select group of US corporations. Yet that is exactly what happened.

Enough already.

Martin Wolf on The Cycle of Corruption in America

“Regulation will be eroded, both overtly and covertly, under the remorseless pressure and unfailing imagination of a huge, well-organized and highly motivated industry. This is not about fraud narrowly defined. It is more about the corruption of a political process in which organized interests outweigh the public interest.”

via Athanasios Orphanides | The Political Roots of the Financial Crisis.

CVS and Sandtown

Will CVS Rebuild Their Looted Store? – The Daily Beast.

It would be nice if CVS rebuilt a the store in Baltimore that was trashed by rioters earlier this month. It would be a fine gesture on the part of a large corporation that it was not holding the entire neighborhood responsible for the behavior of miscreants.

On the other hand, we should not blame them if they decide not to do so. If anything has become clear in the last few weeks, it is that the depiction of the city of Baltimore in the long-running HBO series the wire may be dark, but it seems Pollyannish in comparison to the reality.

This is not about the inexcusable behavior of the rioters. It is not about the hard, penetrating questions that need to be asked about the Baltimore cops and systemic brutality of practices like “rough rides.” It is not about the dysfunction that seems to permeate city government.

It is about all of those things put together.

I am not suggesting that CVS sit back and await the gentrification of Sandtown before it ventures back in. What it should do, if it really wants to make a difference, is say “we want to go back into Sandtown bigger than ever. But we are not going to do it until this city starts taking care of the problems that the residents themselves have been complaining about for years.”

Building a pharmacy in the heart of a blighted neighborhood is, possibly, a good thing. Building a pharmacy while pursuing a coherent approach to removing the blight is an unquestionable public good.

Krugman’s Problem: Naked Partisanship

Knowledge Isn’t Power”
Paul Krugman

NYTimes.com
February 23, 2015

Paul Krugman has written a thoughtful piece about the link between education and inequality in The New York Times. I do not agree with all of it, but his core point – that educational reform is no panacea for the issue of growing inequality – is well taken.

A friend of mine from the Left wondered why his op/ed wasn’t being given more attention. I told her it was simple: Krugman held his audience right up until the end, when he said:

It’s not hard to imagine a truly serious effort to make America less unequal. But given the determination of one major party to move policy in exactly the opposite direction, advocating such an effort makes you sound partisan. Hence the desire to see the whole thing as an education problem instead. But we should recognize that popular evasion for what it is: a deeply unserious fantasy.

There is no reason to turn this discussion into a GOP-bash, but Krugman apparently cannot resist. Problem one is that he is wrong: support for corporate tax holidays, corporate welfare, and and a tax-free Wall Street demonstrably extends deep into the ranks of both parties on Capitol Hill – rhetoric to the contrary notwithstanding.

But the larger problem is Krugman’s desire to define the policy discussion in partisan terms. Turning honest debates about policy into opportunities to score partisan points does neither the debate nor the country any service. It forecloses opportunities to build bi-partisan coalitions around policy. And that is important: history has proven that we do not solve problems in America by giving one party or another dominance over government. We solve problems by forging debates and policies that rise above partisanship and engage the nation as a whole.

I have met Paul Krugman, and find him both intelligent and personable. It is a pity he finds it more important to employ his thinking as a means to divide the nation rather than to appeal for a debate about policy that transcends ideological squabbling. By doing so, he has made himself part of the problem, not part of the solution.