After Mass at St.
Mary’s, a retired FBI agent who had worked as a boy in the great steel plant
in Weirton, W.Va., whose father had died in an accident at the mill, handed
me the Weirton Daily Times. “Where Do We Go From Here?” read the May
20 banner. The front page was devoted to the bankruptcy filing of Weirton
Steel, which had once employed 14,000 workers in a town of 23,000. Mark Glyptis,
president of the Independent Steelworkers Union, said it didn’t have to happen.
It was a poignant story. When I began my campaign of 2000 at the Weirton
mill, Mark and his ISU endorsed me.
That same week, a friend e-mailed me. Timco, a lumber mill where we spent
the last day of the New Hampshire campaign of 1996, had shut down. As Weirton
Steel had been hammered by subsidized steel dumped in the U.S. market, Timco
had to compete with subsidized lumber from Canada.
Across America the story is the same: steel and lumber mills going into bankruptcy;
textile plants moving to the Caribbean, Mexico, Central America, and the
Far East; auto plants closing and opening overseas; American mines being
sealed and farms vanishing. Seven hundred thousand textile workers—many of
them minorities and single women—have lost their jobs since NAFTA passed
Thirty years have elapsed since our free-trade era began and 30 months since
George W. Bush became president. It’s time to measure the promise of global
free trade against the performance.
Undeniably, free trade has delivered for consumers. A trip to the mall, where
the variety of suits, shoes, shirts, toys, gadgets, games, TVs, and appliances
abounds, makes the case. But what has it cost our country?
Every month George Bush has been in office, America has lost manufacturing
jobs. One in seven has vanished since his inauguration. In 1950, a third
of our labor force was in manufacturing. Now, it is 12.5 percent. U.S. manufacturing
is in a death spiral, and it is not a natural death. This is a homicide.
Open-borders free trade is killing American manufacturing.
In 2002, we ran a trade deficit in goods of $484 billion. This May, it reached
the level of $562 billion, nearly 6 percent of GDP. Evangelists of free trade
tell us trade deficits do not matter. Michael Boskin, Chairman of the Council
of Economic Advisers under Bush I, declared, “It does not make any difference
whether a country makes computer chips or potato chips.”
History teaches otherwise. In 1860, Britain abandoned its Britain First trade
policy for the free-trade faith of David Ricardo, John Stuart Mill, and Richard
Cobden. By World War I, Britain, which produced twice what America did in
1860, produced less than half and had been surpassed by a Germany that did
not even exist in 1860.
Free trade does to a nation what alcohol does to a man: saps him first of
his vitality, then his energy, then his independence, then his life.
America today exhibits the symptoms of a nation passing into late middle
age. We spend more than we earn. We consume more than we produce.
Why does it matter where our goods are produced? Because, as I wrote in The Great Betrayal:
is the key to national power. Not only does it pay more than service industries,
the rates of productivity growth are higher and the potential of new industries
arising is far greater. From radio came television, VCRs, and flat-panel
screens. From adding machines came calculators and computers. From the electric
typewriter came the word processors. Research and development follow manufacturing.
Alexander Hamilton, the architect of the U.S. economy, knew this. He had
served in the Revolution as aide to Washington and lived through the British
blockades. He had led the bayonet charge at Yorktown. And he had resolved
that never again would his country’s survival depend upon French muskets
or French ships.
As first Treasury Secretary, he delivered in 1791 the “Report on Manufactures,”
one of America’s great state papers. Reflecting on how close his country
had come to losing its liberty, Hamilton wrote,
only the wealth, but the independence and security of a country, appear to
be materially connected with the prosperity of manufactures. Every nation
… ought to endeavor to possess within itself all the essentials of a national
supply. These comprise the means of subsistence, habitation, clothing and
Under the Constitution he helped write, a national free-trade zone was created.
Hamilton’s idea was to use tariffs to end our dependence on Europe and force
British merchants to finance our government and the roads, harbors, and canals
that would tie America together with commerce.
Tariffs would give our national government the revenue to operate, while
providing our people both privileged access to the fastest growing market
on earth and incentives to go into manufacturing. With American manufacturing
thus encouraged, we would soon produce ourselves the guns and ships to defend
the republic and the necessities of our national life so we could stand alone
against the world.
For 12 decades, America followed Hamilton’s vision. On the eve of World War
I, the 13 agricultural colonies on the eastern seaboard had become the richest
nation on earth with the highest standard of living, a republic that produced
96 percent of all it consumed while exporting 8 percent of its GNP, an industrial
colossus that manufactured more than Britain, France, and Germany combined.
The self-sufficiency and industrial power Hamiltonian policies created enabled
us to rearm in security, crush the Axis in four years, rebuild Europe and
Japan, and outlast the Soviet empire in a Cold War, while meeting all the
needs of our people.
But in the Clinton-Bush free-trade era, Alexander Hamilton is derided as
a “protectionist.” Woodrow Wilson’s free-trade dogma is gospel. Result: our
trade surpluses have vanished, our deficits have exploded, our self-sufficiency
has been lost, our sovereignty has been diminished, and an industrial base
that was the envy of mankind has been gutted.
And for what? All that junk down at the mall? What do we have now that we
did not have before we submitted to this cult of free trade?
The Loss of Independence
Consider the depths of our new dependency. Imports, 4 percent of GDP for
the first 70 years of the 20th century, are near 15 percent now, and 30 percent
of the manufactures we consume. Pat Choate, author of Agents of Influence,
gives the following levels of U.S. dependency on foreign suppliers for critical
- Medicines and pharmaceuticals: 72 percent
- Metalworking machinery: 51 percent
- Engines and power equipment: 56 percent
- Computer equipment: 70 percent
- Communications equipment: 67 percent
- Semiconductors and electronics: 64 percent
the U.S. Business and Industrial Council reported that the Pentagon officials
responsible for procuring U.S. weapons had joined with defense industries
to oppose legislation requiring 65 percent U.S. content. U.S. missile defense
and the Joint Strike Fighter would be imperiled if 65 percent of the components
had to be made in the USA.
As Choate writes, Dell Computers of Austin has 4,500 suppliers. Its just-in-time
supply line, which stretches across the Atlantic and Pacific, has an inventory
of four days. A dock strike on either coast, and Dell begins to close down
after 96 hours.
The Loss of Sovereignty
In the lame-duck session of Congress after the GOP triumph of 1994, Bob Dole
and Newt Gingrich colluded with Clinton to bring us into a World Trade Organization
where we are outvoted 15-1 by the European Union. In its most important ruling,
the WTO has held that the foreign sales corporations of U.S. exporters like
Microsoft and Boeing, set up to receive tax ben