Posted by Shyam Moondra
After the World War II ended, the U.S. undertook a massive
rebuilding effort for Western Europe (the so-called Marshall Plan which cost
American taxpayers $115 billion in today’s dollars). Subsequently, the US adopted
a very liberal trade policy to help Europe and Japan rebuild their economies so
they could recover from the devastation of the war. The same thing happened
with respect to China; after President Richard Nixon’s historic visit to China,
China received our immense help in turning its communist era centralized
economic system to free-market economy. Our accommodating policies were
instrumental for these countries to become prosperous at our expense. Their
relatively cheap labor enabled them to take advantage of our liberal trade
policies; however, in the process, they decimated our textile, consumer electronics,
automobile, steel, and other industries, which has proven to be very harmful to
our industrial base. These countries even used currency devaluation as a tool
to make their exports to the U.S. very cheap, while the U.S. leaders and the
Congress mostly looked the other way (in case of China, we even overlooked their
record on human rights). Later, Mexico and other underdeveloped countries
became the beneficiaries of our liberal trade policies that helped them improve living standard of their people. Our liberal trade policies led to a huge annual
trade deficit of nearly $800 bi with the rest of the world (the biggest five
countries include China - $365 bi, Mexico - $71 bi, Japan - $69 bi, Germany -
$65 bi, and Canada - $18 bi). Our generous
trade policies amounted to the biggest wealth transfer we have seen in the
history of mankind. These accommodating trade policies created ghost towns in
Michigan and Pennsylvania that saw automobile and steel plants being shut down.
The prosperous Europe could have spent more on their defense rather than
relying on the U.S. but, to the dismay of the U.S. policy makers, Europe instead chose
to spend more on welfare programs based on their socialist ideology (that has already brought economic ruins to Greece, Portugal, Spain, Italy, and others) and taking care of the Middle-Eastern migrants from Libya, Syria, and Iraq (that also included ISIS fighters disguised as asylum seekers, who committed terrorist attacks in Belgium, France, Germany, and the U.K.). Even today, the most prosperous
European country, Germany, contributes below targeted amount (less than 2% of GDP) for the collective
defense of Europe, putting more burden on American taxpayers.
In case of China, the U.S. policy was based on the thinking that
as their economy improved, their record on human rights will also improve and
China will one day become a true democracy. While China made some progress on
human rights but one-party rule, censorship, and harassment of political
opponents still continue even today. China is also using its newly acquired wealth to militarize
at an alarming rate, threatening its neighbors’ security. China has also been
building illegal artificial islands in international waters and militarizing
them (in spite of its promises that it will never do that) which drew a
warning from the U.S. Secretary of Defense, Jim Mattis, who said China is using
“coercion and intimidation” against its neighbors and he warned that the U.S.
would consider more aggressive responses to China’s militarization of these
islands. When asked by a reporter about the ability of the U.S. to "blow
apart" one of China's controversial man-made islands, Lt. Gen. Kenneth
McKenzie, director of the Joint Staff, told reporters, "I would just tell
you that the United States military has had a lot of experience in the Western
Pacific taking down small islands." Also, China’s aggressive attempts to
steal American technologies and inventions and profiting from them have become
a real problem.
During the 1950’s through 1980’s, the U.S. was very rich and
powerful compared to other countries, so there was never a concern about other
countries becoming a serious competitive or security threat. But in the last 20
years or so, some of the countries that benefited from our liberal trade
policies have increasingly become a threat to our economic well being as well as
our security. During this time, no U.S. president had the courage to speak up against
all this, even though we have been steadily losing our high-paying manufacturing
jobs. Of course, that made our presidents very popular abroad (President Barack
Obama, for example). But now President Donald J. Trump is saying enough is
enough and his top priority is to stop the loss of manufacturing jobs and theft
of our intellectual property. Trump will do anything to reduce trade deficit
with China, Japan, Germany, Mexico, and Canada. So, obviously, Trump is going
to be the least popular president around the world.
After the end of the Cold War, we also made generous gestures to Russia in
terms of technology transfer and capital flow to help Russia become prosperous,
but Russia’s President Vladimir Putin had other things on his mind such as his “sphere
of influence” thing that led to annexation of Crimea, derailing the possibility
of Russia also joining the ranks of countries that became rich at our expense.
Trump is right on trade issues and G7 would have to recognize that at their
meeting in Canada this week. If our trading partners refuse to learn from the history
of how much the U.S. let them take advantage of Americans, then who needs
friends like that! The American people understand what Trump is trying to do on
trades and taxes - to create more high-paying manufacturing jobs right here in
the U.S. and, for the first time, focus more on making Americans wealthy again.
