"Breathtakingly Misleading"
By Pejman Yousefzadeh Posted in Bill Clinton | Economy | Free Trade | Hillary Clinton | Untruthiness — Comments (35) / Email this page » / Leave a comment »
Hillary Clinton's Presidential campaign should really tell former President Clinton to stay the heck away from talking about trade issues until the election is decided one way or the other. Otherwise, the former President will only serve to severely undermine his wife's campaign:
Addressing a crowd of college democrats Friday, former President Bill Clinton criticized the Bush administration for making trade a "dirty word."
Clinton discussed the amounting inequalities in healthcare, education and income domestically and said the problems had been exacerbated by an increasing deficit financed by foreign monies.
"It is profoundly unequal, and the government's policies have made it more, so by insisting that wealthy people like me get a tax cut every year," Clinton said. "And then [they] turn around and borrow the money to pay for my tax cut, and for our soldiers in Iraq and Afghanistan, from the Chinese, the Indians, the Koreans, the oil exporters and all the people that have trade surpluses with us."
Where to begin?
Read on below . . .
First of all, if the former President is upset about American administrations somehow making trade "a dirty word," then he ought to turn a critical eye towards the fact that when he had a chance in his own second term to push for--and get--fast track authority with which to push for further trade deals, Bill Clinton chose not to do so, likely so that he wouldn't upset Congressional Democrats (whose support he eventually needed in order to stave off a conviction in the Senate). When Presidents of the United States forsake the power and authority to advance the cause of free trade, they successfully make trade "a dirty word." And that is precisely what Bill Clinton did.
Secondly, one gets sick and tired of bleating over "the trade deficit" by people who ought to know better. The trade deficit is a flawed metric and does not matter in our analysis of trade issues--that is, not if we genuinely want to have an honest discussion concerning the issue of trade. Here's why. When former Presidents of the United States who allegedly are "policy wonks" don't appear to appreciate this fact, they help make trade "a dirty word." And that is precisely what Bill Clinton did.
The former President goes on to say that foreign investment in the United States has served to make trade policy "less effective." Allegedly, "the reason we don't enforce our trade laws anymore is they're our bankers." Additionally, we have supposedly "mortgaged our economic sovereignty." This is singularly ridiculous. Would the former President prefer if other countries did not have confidence in the power and reliability of the American economy and therefore did not invest in the United States? Calling American trading partners "our bankers" and implying that they somehow have us over a barrel because of the fact that they have invested in the United States is nothing short of absurd. The reason they have invested in the United States is because they know a good bet when they see one. They know that the American economy will continue to do well over the long term and they want to get in on the action. You don't hear companies complaining about how their shareholders supposedly have forced them to "mortgage [their] economic sovereignty," do you? Of course not. Companies welcome investment--whether by venture capitalists or by individual or institutional investors who buy company stock. It gives the company money and it is a sign of confidence in the company's financial prospects. So it is with investment in the United States. And yet, Bill Clinton wants us to have nightmares about this kind of thing. When former Presidents of the United States who allegedly are "policy wonks" don't appreciate the value and the importance of the investments made in the United States, they help make trade "a dirty word." And that is precisely what Bill Clinton did.
Indeed, if the former President wants to turn his rhetorical fire against those who make trade "a dirty word," he need look no further than another politician named Clinton. Repeatedly--and as recently as the last Democratic Presidential debate--Hillary Clinton has trashed free trade. Under pressure from rampaging protectionists in her party, she has decried NAFTA, one of her husband's actually laudable legislative accomplishments (albeit, one that he took up when it looked as if NAFTA was about to die on the vine) and has declared that she would enforce a trade "time-out," as if free trade is an unruly child that needs to be sent to its room to contemplate all of the very bad things that it did while the would-be central planning Administration of a future President Clinton thought up a suitable punishment for the very naughty free trade movement. Indeed, Hillary Clinton's economic antediluvianism takes many forms and each of them threatens to do great harm to the cause of free trade and free markets.
When a Presidential candidate acts in the ways that Hillary Clinton has acted, she helps make trade "a dirty word." And evidently, she learned how to do that at the master's knee. Up until now, I was part of a big group of people who said that whatever Bill Clinton's other faults, at least he was good for the cause of free trade during the course of his public life.
Perhaps I need to revisit that belief.
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You might learn something by doing so.
"At times one remains faithful to a cause only because its opponents do not cease to be insipid." --Friedrich Nietzsche
Very clearly written and understandable on a subject that is too often not clearly understood. Sometimes wonder if the trade deficit discussion isn't sort of like the Global Warning discussion, a little bit of truth and a lot of fiction.
Joey,
*Budget* deficit, yes. *Trade* deficit, no.
Budget deficits (government spends more than they receive in taxes) drives up our debt. Trade deficit doesn't.
We do have fiscal dereliction. It's called earmarks, Medicare Prescription Drug plan, Republicans (for the moment, anyway), Democrats, and populism.
**********************************
And statesmen at her council met
Who knew the seasons when to take
Occasion by the hand, and make
The bounds of freedom wider yet
- Tennyson, _To the Queen_
That's been an ongoing point of interest to me, any correlation between the trade and budget deficits.
Are you sure there is no relationship between the two? It almost seems like there has to be.
Two reasons... the government isn't the one buying the products to create a trade deficit... our economy is. We aren't a centralized planned state yet (make Hillary the POTUS and she'll try).
Second, if the government of the United States does buy products for whatever reason, it would be included only in the budget deficit.
I'm not sure why you think there MUST be a connection; unless you're just predisposed to think that there must be because it could possibly prove your initial assertion.
they will be wishing they had a trade deficit. These horrible trade deficits that I've been hearing about for years have never interfered with our normal economic cycles, they are financed by the surplus cash of a basically sound economy and constitute nothing more then the acquisition of goods by shoppers of various kinds at what domestically would be called bargain prices.
As to equality, it is not the business of a sane and temperate government to make people equal, ill defined as that phrase has always been. A forced and ham handed equality is only another name for oppression and high taxes, a vulgar appeal to the worst instincts of an ignorant electorate, an age old means of vote and class bribery.
Be assured that the Clintons do not in any manner regard us as being their equals. They're right of course but not in the way they mean.
"a man's admiration for absolute government is proportinate to the contempt he feels for those around him". Tocqueville
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I'm with Fred!
One extreme or the other, capitalism or socialism. Note very clearly here that purist capitalism has also been tried, and failed. See the turn of the century in America, etc. Robber barrons, monopolies, complete disregard for the lives of humans. That is your rapacious capitalist machine at it's purist.
Have you noted the economy of place where some fusion of capitalism and socialism has been experimented with for about a decade now? It's a place who's currency is 1.5 times the stregth of the dollar. What do you say to a vibrant economy and a respect for the health, respect and decent living conditions of the people who's daily labor fuel that economy? What would you say to that?
The Fuzzy Puppy of the VRWC. I've been usurped!
Then it'd just be "How's that permanent urban underclass thing going for you?"
The Fuzzy Puppy of the VRWC. I've been usurped!
You did have a specific one in mind, yes?
The Fuzzy Puppy of the VRWC. I've been usurped!
Due to the comment sequence here, some confusion is apparent. The reference to a healthy economy and collective value was the European Union.
My response to your urban underclass comment was to point out those here in the states.
The Fuzzy Puppy of the VRWC. I've been usurped!
..."banlieue," or even admit to it, don't bother making it.
The Fuzzy Puppy of the VRWC. I've been usurped!
So we don't have ghettos, barrios, inner city slums, rural poverty? Is Skid Row, or Hell's Kitchen, or Philadelphia a figment of my imagination?
Could we get on the same page, here?
750 words on comparative unemployment rates and economic mobility between the bottom fifth quartiles of French and American populations. Write it up, send it in and we'll think about turning your account back on.
Moe
The Fuzzy Puppy of the VRWC. I've been usurped!
...if the line item on my budget for military expenditures consisted of the note "See United States of America."
Moe
PS: I'd also suggest that you wait twenty years before you declare the EU to be a decided success - the first truly organized internal reactions against that organization's bureaucracy are just now starting - except that I suspect that it'd go in one ear and out the other.
The Fuzzy Puppy of the VRWC. I've been usurped!
I would never argue with Moe! Even with a baby in his arms he's quicker and faster with accurate information that I could hope to be.
But I look at it this way, the countries that are creating the European Union to stop the slide of their global clout and prestige, Germany and France each face huge issues in getting a Constitution ratified. Hell, the people of France voted a resounding no on the thing. Now the elected leaders of European countries won't even put it to a vote of the people like they originally pledged.
If this is such a great thing, why aren't they letting the will of the people be heard? Oh that's right, elitism. They truly believe the government knows better than the average citizen.
This is also what happens when you are ruled by technocrats.
...in this exchange. :)
The Fuzzy Puppy of the VRWC. I've been usurped!
Note very clearly here that purist capitalism has also been tried, and failed
No, it hasn't. Certainly some countries at some times have much closer than today, and generally had much higher growth rates.
See the turn of the century in America,
For a country with very high tarrifs and government granted monopolies in the railway sector, for example.
Robber barrons, monopolies,
Mostly in government controlled or managed sectors
complete disregard for the lives of humans
Compared with what? With statist economies like Soviet Russia and Nazi Germany? Or compared with a small number of wealthy countries over the past few decades. Life was indeed cheaper 100 years ago - everywhere, not just in countries with freer markets than modern Europe or America.
It is more than a little absurd to attribute that to changes in the economy and not, say, to changes in medical technology. Especially as at any given time countries with freer markets tend to have a much higher regard for human life and dignity than countries with more controlled markets.
Have you noted the economy of place where some fusion of capitalism and socialism has been experimented with for about a decade now?
Much longer than that. In varying degrees, socialism has crept into the American economy and most European economies. All have experienced growth stagnation in the period.
Do you really want to talk about the last ten years comparing the US and EU? Has the EU matched US growth rates even once in that period? Certainly the average favours the US by more than 50%.
It's a place who's currency is 1.5 times the stregth of the dollar.
Wow! So the unit price of the currency is an indicator of economic strength? As a Briton this is fantastic news to me. My country has a currency that is twice as strong as the dollar. Will the Eurozone countries be applying to join the pound any time soon?
What do you say to a vibrant economy
As vibrant as 2% growth rates? As a Brit, I would say no. Most Americans would say Hell, no.
respect for the health
This is respect in theory you are talking about, I presume. No EU country has as much invested in healthcare as the US.
decent living conditions of the people who's daily labor fuel that economy?
And a complete disregard for those who don't get to labour daily to fuel the economy. France, to take one example, has a pretty high rate of productivity. As long as you define productivity only by those who are in work. Easy to achieve with a high minimum wage, since this makes it illegal for people with low productivity to get a job. And do you really think those in work actually benefit from excluding the less productive from the economy? A high average is, of itself, meaningless. If America set a minimum wage so high that only Bill Gates had a job, then the average productivity of the American economy would be astonishingly high. But every single person in America, including Mr. Gates, would be worse off. So who, exactly, would have benefitted?
Quentin Langley
Editor of http://www.quentinlangley.net
International Editor of
Mike Gamecock DeVine @ The Charlotte Observer
http://thehinzsightreport.com
www.theminorityreportblog.com
www.race42008.com
www.fred08.com
and yes I suppose it's absolutist. But it's also truthful. Socialism doesn't work. It never has and never will. If you'd like to see the collapse of an economy due to implementing socialism, just follow Venesuela for the next couple of years.
If you'd like to see it in history, there are MANY examples of failure with widespread suffering and death (20-60 million in Russia, 10-20 million in China, etc.).
I won't deal with your robber barron comments. Others have already addressed that falacy.
But just for fun, compare the unemployment rates in your "blended" paradises with our own....
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I'm with Fred!
And let me add a point.
The trade deficit doesn't matter, but even if it did the figures quoted for it wouldn't matter, because the figures are wrong anyway.
Governments carefully track imports, since they routinely tax them. They invest in minimising off the books imports, and even fine people or imprison them for smuggling. Governments, however, do not track exports. They just guess at them. And we know for certain that they guess wrong.
We know this because America is not the only country with a 'deficit'. Almost every country in the world has one. China and Japan are the only major economies which have maintained long term surpluses.
In fact the whole planet has a deficit. Every year global imports exceed global exports. Puts a whole new meaning on 'illegal aliens' doesn't it?
Quentin Langley
Editor of http://www.quentinlangley.net
International Editor of
That looks like an excellent idea for a research project. Though I assume it's already been done.
As you say, in theory the sum of all trade surplusses and deficits shoud be 0. Any idea how far off they are?
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I'm with Fred!
But I know that they are consistently off in the same direction and have been for decades.
Quentin Langley
Editor of http://www.quentinlangley.net
International Editor of
I agree with Brian..very interesting point. I'd like to see the numbers to see how far off this is. You say that you know they are consistently off. How far off? How do you know this? Can you point me to data?
I'm not sure of the ultimate sources of data, but I found a Wiki article that claims to have the current accounts of 163 countries.
They state their source is the CIA World Fact Book which I trust about as much as any source, but it's not clear if the numbers were derived from CIA data or the numbers released by the respective countries. There are 64 countries listed with a surplus and 99 in deficit. I added up the numbers and I come up with a total deficit of $93.191 Billion dollars. In other words an amount equal to about 1/2 of China's surplus is just missing. Interesting....
Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.
I'm with Fred!
Between all this hype regarding trade from the Clintons, and the angst he and the likes of Buffet and Gates Sr. have over how their wealth is taxed, it makes you want to gag. If he's so concerned about trade, maybe he should be less concerned about how much money he has, and focus more on where it's coming from. There will be a glaring conflict of interest should Mrs. Clinton win the Presidency, to have her husband (more precisely his library foundation) receiving monies from his interenation cartel of Chinese and Arab admirers. Of course, we won't be hearing much about this; somehow the press turns a deaf ear to how these 'ex presidents' fund their lifestyle and libraries. Too bad the American people are so naive as to accept that.
Donations are distinct from loans. Donations (theoretically) have no strings attached. Loans involve interest and ultimately extort money from the lendee. Isn't there like a commandment against loaning money and charging interest?
What is the interest on the US debt? How much is every man, woman and child paying to that interest every day?
...run a budget deficit. People who want to lend money to the Federal government must do so in dollars, so either they buy them in the open market (which would put up their value, so we know it's not happening), or else they use dollars they already have.
And foreigners who already have dollars are likely to be the ones that run trade surpluses with us. So Clinton was taking a populist shot at the current account deficit by way of arguing in favor of higher taxes.
In regard to direct foreign investment in the US, which does not appear to be what Clinton had in mind (although he's just as pea-brained on economics as his wife is): no one ever seems to remember that total direct foreign investment by Americans in other countries is large and growing rapidly.
In fact, by the back of my envelope, we're getting at least twice the return on our direct investments elsewhere, than we're paying on the national debt. That's one big reason why the Federal government can keep running deficits.
At the end of the day, how we fund the Federal government (debt or taxes) ultimately depends on the relationship between the yield curve and the organic growth which is attainable by US investors, both domestically and abroad.
Since this is a conservative forum, I should throw in the obligatory lip-service to how much better it would be to just cut spending. But there is no political constituency for lower Federal spending, in fact the people are moving in the other direction. So we will need to choose between debt and taxes.
Of course we won't choose until push comes to shove. That day will come, and it sure will be interesting.
The deficit is due to disappear late next year or early 09.
As of october the annual deficit (nov06-oct07) was 169 billion. A little over 1% of the economy and dropping. Tax receipt growth was outpacing spending growth by about 3.5%.
My only worry on that is either a democrat win in november or perhaps the congress trying to spend themselves into retaining power.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
...is tax receipts. If we really are having the recession that everyone except Larry Kudlow is cheerleading, then it'll show right up in higher (possibly much higher) deficit numbers next April.
Democrats in Congress and the White House: you can safely bet any amount of money that they will bust the budget something fierce. We'll get higher taxes (which will be sold as "fiscal discipline"), but spending increases (which will be sold as "long-neglected investments in our children's future") will far outstrip revenue increases.
Are you sure that your generalized analysis and abrupt dismissal of trade deficit isn't breathtakingly misleading? I am not an economist, but common sense would seem to dictate that a trillion-dollar trade deficit on top of a $10 trillion debt would fall under the category of fiscal dereliction. Can you tell me the interest on $10 trillion?