Offshoring economy and military

By ERNEST F. HOLLINGS, former U. S. senator


MAY 6, 2013 -- The economy continues to falter because of the offshoring. In December 2006, the Princeton Economist Alan Blinder estimated that in ten years the U.S. would offshore 30-40 million jobs. Corporate America continues to offshore its research, technology, production and jobs - the economy. Economists say the economy fails to bounce back because of a lack of consumer confidence. It's a lack of money - offshoring payrolls.

Paul Krugman, the Nobel economist, calls for more stimulus. We've stimulated the economy $5 trillion in the past 5 years and the CBO estimates that we are stimulating the economy another $845 billion this fiscal year. Listening to the best of economists on the Senate Budget Committee for 30 years, I know that Henry Kauffman and Paul Volker would say it is time to stop the borrowing and pay for government.

It's time to compete in globalization. Globalization is nothing more than a trade or economy war with production looking for a country cheaper to produce. Capital will always seek lower wages and the United States with its advanced economy must develop an industrial policy to survive.

"China is becoming an economic superpower as the United States offshores its economy. China offshores work crews around the world. "

-- Hollings

Alexander Hamilton pointed the way with his Report on Manufactures. Two years before the Constitution, Congress adopted the Tariff Act of 1787 which turned the fledgling Colony into an industrial giant. But today, The Economist Special Report on Offshoring (1/25/13) admonishes that "America's government is not making the country's business environment attractive enough" for Corporate America to manufacture in the U.S.

Every Governor knows how to attract industry. Instead the President and Congress put us off with the need for skills. South Carolina has the skills to make the "ultimate driving machine" for BMW and Boeing's Globemaster. Yet, we still have 8.4 percent unemployment because our textile industry has been offshored. This is what's happening to the economy of the United States.

The President and Congress must cut the 35 percent Corporate Tax and replace it with a 7 percent Value Added Tax. This immediately releases almost $2 trillion in profits for Corporate America to repatriate tax free and start rebuilding the economy. The VAT tax cut allows us to pay for government and balance the budget in two years rather than ten. Then we can flesh out an industrial policy by enforcing our trade laws to protect the economy. We don't need to protect all manufacture, but must protect those items vital to defense and a strong economy. If Presidents Bush and Obama enforced the Defense Production Act of 1950, the Detroit bail out wouldn't have been necessary. If President Obama would protect steel, motor vehicles, computers and machine tools like President Reagan in 1984, this would give us a solid industrial policy and we could start rebuilding our economy.

Ten years ago, in Singapore, Lee Kuan Yew told Senator Richard Shelby and me that China was determined to take over the world economically. "China's leaders are not only good politicians, they are students of government." The leaders have their hands full keeping law and order as China develops. Even our Freedom of Speech in the United States prohibits calling out "Fire!" in a crowded theater.

China's leaders consider China one grand theater. They know they have to control freedom and democracy or the country will come apart. They also know that the U.S. retreated in Korea and was wary of China's entrance into the Vietnam War. The U.S. is sensitive to casualties; China is not. China knows that in a nuclear world there is no such thing as a military superpower. The United States acts like there is.

China is becoming an economic superpower as the United States offshores its economy. China offshores work crews around the world. The U.S. offshores 196,000 GI's and drone kills in friendly countries, making them hostile. I traveled the world for 38 years as a U.S. Senator and everywhere the United States was liked and admired. But ever since President Bush created the War on Terror, and President Obama continues it, terrorists are everywhere. Everybody that has a difference with the U.S. is considered a terrorist. In Bush and Obama's world, Patrick Henry and Thomas Jefferson, would have been considered terrorists. President Obama kicks off his Asian policy by offshoring 2500 Marines to Australia. Ridiculous. Australia is not going to war with China; neither are we. We better pull in our horns, rejuvenate our Good Neighbor Policy and rebuild our economy.

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).

© 2013, Ernest F. Hollings. All rights reserved. Contact us for republication permission.

About Fritz Hollings

Ernest F. Hollings served the public for 56 years -- 38 years in the United States Senate and as South Carolina's governor, lieutenant governor and a member of the S.C. House of Representatives.

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