The Hollowing Out of America

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– February 26, 2002

What does conservatism stand for in 2002? What is it we wish to conserve? “Work, family, faith, community, country.” Were these not what Ronald Reagan celebrated?

Yet consider what is happening to community, country and work in America because of the free-trade zealotry of the Clintonites and the Bushites, who profess to be conservatives.

Last week, there came to my office from the keeper of the stats of U.S. industrial decline, Charles McMillion of MGB Information Services, the final figures for the U.S. merchandise trade deficit for 2001.

Good news: It diminished by 6 percent. Bad news: It was the second largest ever. America imported $427 billion more in goods than we exported to all the other 190 nations on earth. In manufactured goods alone, our trade deficit was $309 billion, which translates into 6 million lost manufacturing jobs

Comes the retort: Not to worry. America excels in producing high-tech items other nations are not advanced enough to produce. So long as we are on the cutting edge of industrial technology, who cares who cuts cloth, stitches shoes or makes steel?

Well, take a hard look at McMillion’s stats. Not only did we run trade deficits in textiles, shoes and steel, we ran trade deficits in autos, trucks, TVs, VCRs, automatic data-processing equipment, office machines, electrical machinery, power-generating machinery, metalworking machinery, industrial machinery and optical goods.

Among the products where America boasts a trade surplus – i.e., we sell more of these to the world than we import – are soybeans, corn, animal feeds, wheat, meat, cotton, cigarettes, hides, skins, scrap, pulp, waste paper, coal, tobacco, rice and fertilizers. Reads like a list of the leading exports of the Jamestown colony.

Writes Paul Craig Roberts, free trader and co-architect of the Reagan tax cuts, “It comes as something of a shock to discover that the United States … has the export profile of a 19th-century Third World colony.” Once the most self-sufficient of nations, America is now dependent on foreigners for 40 percent of our manufactured goods, and our dependence on foreign oil and natural gas now costs us $90 billion a year. Why is this happening to America? With NAFTA and GATT, corporations can move capital, factories and technology anywhere, which gives the comparative advantage to low-tax, low-wage countries with large pools of dependable and docile (i.e., no unions) workers.

And what are foreign folks doing with the billions of dollars we yearly ship abroad for goods made outside the U.S.A.? “In 2000, 97 percent of direct investment by foreigners went for the purchase of existing U.S. assets,” writes Roberts. As companies leave America, foreigners come in with their trade-surplus billions to buy up the U.S. companies left behind. “We are not only losing industrial jobs, we are losing ownership of our companies,” Roberts writes.

The New York Times’ Peter Kilborn, a classmate of this writer at Columbia School of Journalism 40 years ago, took a Sun Belt tour to survey the ghost towns created by McMillion’s grim statistics.

In Pima, Ariz., and Bartow, Ga., Kilborn reports, cotton prices have collapsed because of Chinese imports. Uranium mining has stopped in Falls City, Texas. In Loving County, Texas, oil exploration has stalled as we shovel petrodollars to Saudi Arabia. In Brady, Texas, “the ranchers who raise goats for Angora wool are victims of low prices and competition from New Zealand and Argentina.”

“All the rural parts of New Mexico are dependent on mining and almost all hard-rock mining is going offshore,” one mining official told Kilborn. In Silver City, N.M., Phelps Dodge, the biggest mining outfit in the state, has laid off 1,700 of its 2,400 workers. Copper prices have tumbled 50 percent. If they rise again, New Mexico’s mines are less likely to benefit than the mines in Peru and Chile.

Pima, Barstow, Falls City, Loving County, Brady, Silver City – the hollowing out of such quintessentially American towns as these is what our deracinated economic elites celebrate as “creative destruction.”

Consider what free trade is costing. America’s industrial dynamism and economic independence are vanishing. Company towns are turning into ghost towns. High-paying manufacturing jobs that provided a living wage for one man to raise a large American family on a single income are being shipped to foreign workers.

Has free trade made America more, or less, independent? Has it made us more or less vulnerable to financial crises? What exactly is it that today’s conservatives wish to conserve, besides their untrammeled access to the limitless junk down at China-Mart?

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