Right Thinking From The Left Coast
Chance favors the prepared mind - Louis Pasteur

Sunday, November 14, 2010

Journey To Nowhere


Has there ever been a major economic summit where a U.S. President and his Treasury Secretary were as thoroughly rebuffed as they were at this week’s G-20 meeting in Seoul? We can’t think of one. President Obama failed to achieve any of his main goals while getting pounded by other world leaders for failing U.S. policies and lagging growth.

The root of this embarrassment is political and intellectual: Rather than leading the world from a position of strength, Mr. Obama and Treasury Secretary Timothy Geithner came to Seoul blaming the rest of the world for U.S. economic weakness. America’s problem, in their view, is the export and exchange rate policies of the Germans, Chinese or Brazilians. And the U.S. solution is to have the Fed print enough money to devalue the dollar so America can grow by stealing demand from the rest of the world.

But why should anyone heed this U.S. refrain? The Germans are growing rapidly after having rejected Mr. Geithner’s advice in 2009 to join the U.S. stimulus spending blowout. China is also growing smartly having rejected counsel from three U.S. Administrations to abandon its currency discipline. The U.K. and even France are pursuing more fiscal restraint. Only the Obama Administration is determined to keep both the fiscal and monetary spigots wide open, while blaming everyone else for the poor domestic results.

One of the key issues was the free trade agreement we signed with South Korea ... three years ago.  Obama has let it languish, as he has the Columbia FTA.  He wanted the Koreans to re-open it, yet again showing that he sees himself as the President of UAW rather than USA:

The Koreans rightly refused to substantially alter the sections of the agreement relating to automobiles. The agreement would eliminate tariffs on all automobile trade between the two countries. Ford, Chrysler, and the United Auto Workers union oppose the deal, claiming that it does not address non-tariff barriers that allegedly hinder U.S. exports to the Korean market.

As I posted in this space a few days ago, there are perfectly normal market reasons why Americans buy a lot more Korean cars than vice versa. The real agenda of Ford, Chrysler, and the UAW is not to gain greater access to the Korean market, but to prevent any greater access of their Korean competitors to the U.S. market.

The talks in Seoul this week reportedly foundered on the specific U.S. demand that Korea relax its emission and mileage standards so that U.S. automakers can more easily modify their cars for the Korean market. How ironic. It has become part of the Democratic mantra on trade that agreements must strengthen the environmental and labor standards of our trading partners. Yet here U.S. negotiators were strong-arming the Korean government to weaken its own standards while the Obama administration seeks to impose higher mileage and emission standards on cars sold in the United States.

The Obama people also suggested a ridiculous 4% limit on trade surpluses or deficits.  I see no way this could be achieved without eviscerating free trade agreements and imposing massive intrusion into the private sector.  How do you force people not to buy imported products?  And how does any rational person propose what would be, in effect, Smoot-Hawley II?  We need more trade right now, not less.

Even the Left is having trouble defending this stupidity, claiming that Obama just couldn’t seem to get the deal done.  I guess you could defend his actions if you’ve drunk enough Obama Koolaid—he’s proposing dumb policy to placate the Left but deliberately flubbing it to placate reality.  But that’s an awfully stupid game to play especially when he had the opportunity to break open some markets and stimulate the flow of trade.

I have yet to see any evidence that this President has even a basic understanding of economics.  Oh, he understands Keynsianism well enough when it supports spending lots of money.  But free trade?  Incentives?  The Laffer Curve?  Don’t make me laugh.

Posted by Hal_10000 on 11/14/10 at 06:14 PM in Politics   Law, & Economics  • (0) TrackbacksPermalink
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