AUG. 22, 2012 -- Listening to Morning Joe (8/20/12) one would think that Corporate America was responsible for jobs. Corporate America is responsible for profits. The government is responsible for jobs.
War II the South was broke with no industry. We Southern Governors learned
quickly that government was responsible for creating jobs. We didn't cut
taxes or get federal aid for policemen, firemen and teachers to create
jobs. We increased taxes, got a AAA credit rating, beefed up education
and skills and industry came running. Today, we have the skills to make
Boeing's Globemaster and "the ultimate driving machine" for
BMW. But the government in Washington has been giving away our textile
industry to spread democracy and South Carolina has 9.6% unemployment.
heard all the Washington lectures on innovation, skills, productivity,
education, etc. In the 70's and 80's, the textile industry was investing
$2 billion a year to increase productivity. But the most productive textile
industry in the world was offshored to the least productive for foreign
policy. I started the Advanced Technology Program in 1989 to develop the
innovation backed up in the Bureau of Standards in the Department of Commerce.
It worked so well that I got the Competitiveness of the Year Award from
industry. But the ATP has been abolished. It's the President and Congress
that's not doing their job.
leadership would have us believe that globalization is a new phenomenon.
The United States was born in globalization or a trade war - Boston Tea
Party. In the early days we produced agriculture cheaper than any other
country. But the founding fathers rejected David Ricardo's free trade
Doctrine of Comparative Advantage and enacted the Tariff Act of 1787 -
two years before the Constitution. This industrial policy of protectionism
worked so well that Edmund Morris writes in Theodore Rex that within
a hundred years the Colony "was $25 billion richer" than the
Mother Country. As Corporate America builds the economy of China and depletes
the economy of the United States we forget our history.
China with its controlled capitalism gives Corporate America certainty and protection for its investment. Corporate America rushes to China with its research, innovation, production, jobs - our economy. We'll be drained dry if this continues. We can't prevent the offshoring but it's incumbent on the President and Congress to limit the offshoring to maintain a strong economy. This calls for developing and enforcing our industrial policy. Our industrial policy has been embellished over the years with trade laws to make sure the nation can defend itself and the economy can be protected. If President Obama would enforce the Defense Production Act of 1950 like President Kennedy, we wouldn't be begging Russia for helicopters for Afghanistan.
Obama would levy a 10% surcharge on imports like President Nixon in 1971,
when our trade deficit was a miniscule of todays, it would create millions
of jobs. If President Obama would protect steel, motor vehicles, computers
and machine tools like President Reagan in 1984, our unemployment rate
would be 5.3% rather than 8.3%. If Congress would quit whining about China's
devaluing its currency, and act, it would create millions of jobs. The
Olympics has just proved that the United States is the most competitive
nation in the world. But its government - The President and Congress -
refuse to compete in globalization. Wall Street, the big banks, and Corporate
America want to keep the China profits flowing. They contribute to the
President and Congress to do nothing and the President and Congress do
and Congress should replace the 35% Corporate Tax with a 7% Value Added
Tax. 150 nations compete in globalization with a VAT that's rebated on
exports. The Corporate Tax is not rebated. Not having a VAT is killing
manufacture in the United States. A U.S. manufacturer exporting to China
pays the 35% Corporate Tax and is levied a 17% VAT when its exports reach
Shanghai. But a manufacturer in China exports to the United States tax
free. Last year the Corporate Tax produced $181.1 billion in revenues.
A 7% VAT for 2011 would have produced $872 billion in revenues. Cancelling
the 35% Corporate Tax and replacing it with a 7% VAT releases a trillion
dollars in offshore profits for Corporate America to create jobs in the
United States. This VAT tax cut produces billions to pay for government,
creates millions of jobs and jumpstarts the economy.
Sally-Port of the main barracks at The Citadel is a plaque by Robert E.
Lee: "Duty is the sublimest word in the English language." If
we can get the President and Congress to do their duty, the country can
go back to work.
Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of Making Government Work (University of South Carolina Press, 2008).
© 2012, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
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