An Exorbitant Privilege

Two years ago, Congress began to assemble the most comprehensive protectionist legislation since the disastrous Smoot-Hawley tariff of 1929-30. Hundreds of new bills have been introduced, some calling for fair trade, others calling for quotas, “voluntary” and “orderly” marketing agreements, export subsidies, selective import fees, countervailing duties, and manipulation of foreign-exchange rates. Such measures signal real danger for the free world trading order, so laboriously constructed after World War II upon the foundations of the Bretton Woods Monetary Agreement of 1944 and the General Agreement of Tariffs and Trade (GATT) of 1948.

The overvalued dollar of 1985, combined with slow growth for the past two years, has brought about consensus for some form of U.S. protection. The cries for relief from declining unions and wounded industries will not be stilled by Administration rhetoric. In August 1986, Congress came within eight votes of overriding the President’s veto of the textile, apparel, and shoe protection bill. With mines, farms, and industrial plants shut down all over America, what congressman could fail to be moved by the pleas from unemployed workers and underemployed manufacturers? The numbers are staggering. The merchandise trade deficit grew from $40 billion in 1981 to $123 billion in 1984 to $150 billion in 1985; at present rates it will wind up at approximately $170 billion for 1986. More than 400,000 jobs in the manufacturing sector have been lost in the last 24 months. Since 1980 almost three million skilled manufacturing jobs have been lost. Net of offsetting gains, two million well-paid industrial jobs have disappeared. While more than nine million jobs have been added to the U.S. economy since 1980, it does no injustice to point out that nearly 60 per cent are in “miscellaneous services,” where the average wage is 25 per cent above the poverty level if it supports a family of four. Another 30 per cent have been added in retail, where the average wage is 82 per cent of the poverty level if it supports a family of four.

LE

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Lewis E. Lehrman

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Two years ago, Congress began to assemble the most comprehensive protectionist legislation since the disastrous Smoot-Hawley tariff of 1929-30. Hundreds of new bills have been introduced, some calling for fair trade, others calling for quotas, “voluntary” and “orderly” marketing agreements, export subsidies, selective import fees, countervailing duties, and manipulation of foreign-exchange rates. Such measures signal real danger for the free world trading order, so laboriously constructed after World War II upon the foundations of the Bretton Woods Monetary Agreement of 1944 and the General Agreement of Tariffs and Trade (GATT) of 1948.

The overvalued dollar of 1985, combined with slow growth for the past two years, has brought about consensus for some form of U.S. protection. The cries for relief from declining unions and wounded industries will not be stilled by Administration rhetoric. In August 1986, Congress came within eight votes of overriding the President’s veto of the textile, apparel, and shoe protection bill. With mines, farms, and industrial plants shut down all over America, what congressman could fail to be moved by the pleas from unemployed workers and underemployed manufacturers? The numbers are staggering. The merchandise trade deficit grew from $40 billion in 1981 to $123 billion in 1984 to $150 billion in 1985; at present rates it will wind up at approximately $170 billion for 1986. More than 400,000 jobs in the manufacturing sector have been lost in the last 24 months. Since 1980 almost three million skilled manufacturing jobs have been lost. Net of offsetting gains, two million well-paid industrial jobs have disappeared. While more than nine million jobs have been added to the U.S. economy since 1980, it does no injustice to point out that nearly 60 per cent are in “miscellaneous services,” where the average wage is 25 per cent above the poverty level if it supports a family of four. Another 30 per cent have been added in retail, where the average wage is 82 per cent of the poverty level if it supports a family of four.