Prosperity begins at home

http://www.jewishworldreview.com | The controversy in Congress over House Armed Services Committee Chairman Duncan Hunter's proposed "buy American" provisions in the coming year's Pentagon budget has reminded us all just how complicated the globalization of markets has become.

The provisions would make it mandatory for contractors to use machine tools and molds made in America when working on defense acquisition programs of more than $5 million. The provisions would also raise the percentage of American-made components in major weapons programs, from 50 percent to 65 percent.

Hunter has defended the provisions, saying, "Other countries just have to understand. We have to do everything we can to protect our defense industrial base."

Opponents argue that the idea will prove too burdensome to aerospace contractors and will be a detriment to our international relations. Some free-trade advocates say that we need to maintain open trade relations.

"How can we ask foreign governments to allow American companies to compete fairly for their government contracts when we don't allow their companies to compete fairly for our government contracts?" asks Dan Griswold, associate director of the Center for Trade Policy Studies at the Cato Institute.

That's a fair question.

But it seems to me that Duncan Hunter is absolutely right in his argument that this country cannot be dependent on foreign producers when it comes to our national security. Hunter has created an uproar precisely because there are often confounding contradictions between policies that are in the best interest of our national security and policies that are in the best interest of our economy.

Free-trade supporters claim that globalization has brought us closer to our allies and has lowered prices for American consumers.

But try convincing the millions of Americans who've lost their jobs over the past few years that globalization is a great idea. And many economists are beginning to notice that a pure ideological commitment to free trade may be as foolhardy as absolute protectionism.

There is evidence that open trade policies and global trade pacts have ultimately been detrimental to the U.S. economy. Research from the Economic Policy Institute found that an estimated 3 million American jobs were lost due to the NAFTA and WTO agreements. In addition, the U.S. trade deficit with Canada and Mexico has multiplied by 10 since the 1993 NAFTA agreement, yet our overall economy hasn't quite doubled.

Our international deficit in goods and services increased to $42 billion in May. And our current account deficit, the Commerce Department's broadest measure of trade, hit a record $503 billion in 2002.

This means that we are buying far more in goods and services from the rest of the world than we are selling. And the Economic Policy Institute estimates that 99 percent of this deficit is due to the goods that we purchase from overseas because we no longer make them here. That should be alarming to even the most ardent free-trade advocates.

There are, of course, those who believe we can turn back the clock and find comfort in high tariffs protecting every industry in this country. These absolutism of these staunch protectionists forces most of us to dismiss even their valid points. And the absolutists who demand free trade should be dismissed as quickly as the protectionists.

There is no more glaring example of the folly of unrestricted trade than China. The United States ran an almost $10 billion goods deficit with China in May. As Roger Simmermaker, author of the book "How Americans Can Buy American," put it, "China would have no interest in opening its markets to the United States because they enjoy almost unimpeded and unlimited access to our market while they practice protectionism at home."

It's time to re-examine how our trade policies have negatively affected our economy while boosting the economies of other nations. We can no longer sustain a free-trade policy that does not insist on reciprocal, mutual benefits to both our economy and the economies of our trading partners. Globalization at any price is proving to be too much for this nation to pay.

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