Transcript: Danny Schecter on Protectionism, 20 July 2009

Thom: And greetings my friends! Patriots, lovers of democracy, truth and justice, believers in peace, freedom and the American Way. Thom Hartmann here with you. Over the weekend Louise and I were back in Michigan, in fact we did our show, those of you that were listening, Friday from Grand Rapids and our affiliate there, WTKG (tip of the hat), thanks to Angie and all the great folks who helped make that possible. And Michigan has the distinction of 15.2% official hard core unemployment rate, which means that the real unemployment rate, when you figure people who have stopped looking for jobs who are no longer counted or people who are not for a whole variety of reasons, not in the official statistics, is well into the 20s and probably when you consider under employment, people who are working 2 or 3 jobs just trying to make it and still not making it, or people who are working only part time when they want to work full time, it’s probably in the 30s.

And we drove, we had this family reunion on Saturday in Lansing at my brother Stan’s house, and then we drove out to Lapeer out near Flint. We drove through Flint, the epicenter, from the 1980’s when General Motors closed 5 factories and then reopened them in Mexico that year. And Michael Moore made a movie about that called uh… something about Mr. Smith, I forget the title [Roger & Me - ed.]. But in any case, Michael Moore made a movie about that. And as we were driving around Michigan, and my son and his girlfriend were in the back seat, Louise and I in the front, and I was ranting about how I could not find any local businesses. As we’re driving, and here’s a state that is in the most desperate straights of every state in the country. And you know we drove by a giant Wal-mart as we were coming into Flint. And I said, “That is a vacuum cleaner. That is a money machine, a money vacuum cleaner. It pulls in all this money from the local community, from the Flint, Michigan community, and at midnight somebody pushes a button and all that money goes to Bentonville, Arkansas. And 15 minutes after midnight another button gets pushed and a good chunk of that money, probably 50, 60, 70 percent of it goes to China.

And store after store after store. I don’t think I saw one actual locally owned business all the time we were driving around in Flint and Lapeer. And for that matter in Lansing. Driving around in Lansing, there’s a few small locally owned businesses, but they are few and far between and they tend to be pawn shops. I’m not saying that facetiously, I mean, literally are. All the restaurants are chains, all the clothing stores are chains, all the toy stores are chains, all the gas stations are chains, which means that at the end of every day, all that money is leaving the state and going someplace else.

So how can you build a state like this? You know, Bernie Sanders has suggested that any two states who compete on tax dollars to bring companies into the state, you know like when Boeing decided they were going to move their headquarters, they said, “Okay, who will give us the biggest tax break?” And it came down to three states saying, “We’ll give you a hundred million!” “No! We’ll give you 200 million!” “No! We’ll give you 300 million! Plus we’ll subsidize the workforce!” or whatever. And corporations play states off against each other all the time. Governments play nations off against each other all the time. I am strongly thinking that we need to have, and Bernie Sanders' suggestion was, any state that does this loses federal highway dollars, so they would stop doing it. And that we should go back to the way that this country was protecting our industries, because we drove past mile after mile after mile of shuttered up factories, and homes falling apart in disrepair because those people no longer have jobs, protecting out industries in the United States, bringing our jobs back to the United States. And I’ve written about this at length, I've written a book about it, I’ve written several articles recently about this. Alexander Hamilton, of course the guy who started this in 1791 with his "Report On Manufactures", which became law in the United States in 1793 and was enforced up until Ronald Reagan came into office.

Danny Schecter, on the other side of the debate, has been writing recently about the wonders of free trade. And Danny Schecter,, a good progressive, and a guy that I honor and respect, and so I thought it would be really interesting to have a conversation about this. Danny, first of all, welcome to the show.

Danny Schecter: Thank you so much Thom, and by the way it was "Roger and Me", Michael’s movie.

Thom: "Roger and Me"! Thank you! Yes! I was remembering Smith’s last name, I couldn’t remember his first name. "Roger and Me". You are absolutely right. Okay, Danny, from what liberal…

Danny Schecter: And you should know one more thing, Thom, I was assistant to the Mayor of Detroit in 1966, I lived in Michigan, and I have seen the devolution of the economy there, along with everybody else, and feel the incredible pain that workers there have been experiencing. I am in no way a proponent of the corporations, I’m just concerned that Unions and insisting on protectionism that they cannot achieve an economy which has changed totally to become globalized and interdependent, are barking up the wrong tree. And that the reason we have all of this is because Wall Street invested in the restructuring of our economy and nobody challenged them.

Thom: No, it’s because the politicians, Jimmy Carter was the first to drink this Kool-aid, although he was still busting up AT&T, but, with deregulation of the trucking industry, the airline industry and others, but it was Reagan who said, with regard to trade, we’ve got to roll back the Hamilton Policy, the Alexander Hamilton Policy. We had tariffs in this country that started at 12 and a half percent in 1791, they were up to 25 percent by the time of the war of 1812, they stood between 25 and 45 percent continuously, actually with three exceptions where they dropped down in one case down to 25 percent, typically down to 28 percent, continuously up until the 1980s. Right now, average import tariffs in the United States are at 2.2 percent. And those import tariffs are the only reason why we make clothes in the United States, why we make shoes in the United States, why we make jeans in the United States, why we make cars in the United States, why we make computers in the United States, why we make TVs in the United States, radios, all the things that we don’t make here anymore. What’s wrong with protecting a domestic industry? What’s wrong with a nation, with every nation, saying, 'you know, we’re gonna look out for ourselves first, and when we are self sufficient, then we will participate with the rest of the world in ways that are going to help others?'

Danny Schecter: The problem is that, you know, the same way that no man is an island any more, no nation is an island unto itself. We’re in an integrated, international economy.

Thom: That was true in 1650!

Danny Schecter: I understand! But it might be more so today because the way our whole economy was restructured, the way our unions lost power, the way our wages for workers was kept low, the way in which the corporate systems that are taking over our Congress, to excessive lobbying and political donations, all of that has given people who want protection, who need protection, very little leverage to get it. The question is what strategy should we be pursuing? That’s what I’ve written about in this piece that was on Common Dreams and Huffington Post and other places. And I zeroed in on one particular case which is in the state of Ohio, where you have rubber factories manufacturing tires. Many of those tires that are being manufactured today, those companies invested in transferring their production to China. So many of those companies are now in China. But now China has a tire company which is selling what are called replacement tires; the lowest cost tires in the American market. No American company is manufacturing anymore. And so what’s happened is that the steel workers union, in a desire to protect its members and protect jobs are demanding, you know, higher tariffs on these tires.

Thom: Right. It would be profitable to manufacture them in the United States, then.

Danny Schecter: And if they get them, it’s my, what I see is that they don’t want to manufacture these tires. They want to manufacture higher premium tires so they can make more money.

Thom: They will make whatever they can make money at, Danny. If there is a market, if there is a hole in a marketplace, if there’s an opportunity to make money selling something, somebody in the United States, some entrepreneur in the United States, is gonna do it.

Danny Schecter: Well maybe so, but the tire industry association, this is the association of the corporations.

Thom: Corporations are making money off off-shoring.

Danny Schecter: Yea, they’re saying that in fact the reason that we had this situation to begin with is that the American tire companies moved to China and to other places, most of their production. We import China, we import tires from American companies in China and other countries instead of American products.

Thom: Will you be joining me in saying that we should be taxing the hell outta that so that they stop doing it?

Danny Schecter: Well I think that may be one tool, but what I see is the unions have been sitting down and not really fighting what Wall Street has been doing.

Thom: Well the Unions are only 7 percent of the American workforce. I mean we need to get all Americans engaged in this, we need to have a trade policy that puts America first. Danny can you stick around over the break?

Danny Schecter: Yes.

Thom: This is an important conversation.

Danny Schecter: Yes, it is.

Thom: I’m shocked that a liberal brother would go, in my opinion, against the middle class in America. And you can defend yourself.

Danny Schecter: I’m a member of the middle class.

Thom: I’m sure you’ll do a vigorous job of defending yourself against that tease on the way back. Danny Schecter with us, his web site. Thom Hartmann here. How do we put together an economy that works?


Thom: It was 40 years ago today that you heard the voice of a young Steven Spielberg as the production was put together, no, I’m just kidding, that we walked on the moon. I don’t know, there weren’t any robotic pigeons flying around, maybe it actually wasn’t the moon. We can get into that as we go through the show. By the way in our second hour, Dahr Jamail is here with his new book "The Will To Resist: Soldiers Who Refuse to Fight in Iraq and Afghanistan".

Danny Schecter: I love Dahr Jamail, I'm the chairman of his fan club.

Thom: Oh, yeah, he's a great guy. And Scott Horton from Harper’s in the third hour, a dark look at the Department of Justice. Right now, Danny Schecter is with us,, the media dissector. And Danny, from one liberal brother to another, can we bring our jobs back home?

Danny Schecter: You know I just was listening to your show, Thom, I must say, you had a wonderful endorsement from a woman who imports wine from France.

Thom: Right. I’m not opposed to international trade, and in fact I think that that’s the perfect example of where trade is good. When we have, and in fact if you go back and read Wealth of Nations, Adam Smith’s book in 1776, the point that he made is that if you’ve got a country that makes good wool, use your natural resources. You’ve got a country where they have good wool, you’ve got another country where they have good cheese, you’ve got a third country that makes good wine, they all three should trade with each other so everybody can have a glass of wine with their cheese and be warm with a sweater. On the other hand, if two of those nations both are making wool, then they both have an obligation to protect their domestic wool industries.

Danny Schecter: You know we do have an International Trade Commission, which is regulating if you will, or overseeing the whole tire import situation, the government, the unions.

Thom: But not with any interest about our workers or our middle class. They’re only about the transnational corporations. You're talking about the World Trade Organization?

Danny Schecter: They’re actually ruling on behalf of the union in this dispute and they are saying the union is right, and the Obama administration has the rule on this come September, they will be the final arbiter. The president has to make a determination on this, so we will see what happens. My only concern is, you know, we do need jobs in America. We need them badly, we need to have investment into local communities. We need local entrepreneurs and business people and even unions and others getting into business so they can begin to employ people and help sustain our economy. I’m all for that. We need a policy on this and we need to really fight for this. In fighting for this, I think we need countervailing power against the power, weight of Wall Street, which is moving us in the other direction and has already crashed our whole economy.

Thom: But it’s not Wall Street, it’s our trade policy, Danny. Our trade policies. We did away with tariffs, we did away with defending local industries, which is how by the way, the Lexus happened. Toyota failed in the 1950s when they tried to come into the U.S. market, and for 20 years the Japanese government subsidized that company, they subsidized the production of the Lexus, they forbade General Motors from selling cars in Japan, to this day it is very difficult to sell a U.S. car. Right now if you want to sell a U.S. car in China it’s a 21 percent import tariff. You want to sell a Chinese car in the United States it a 2 percent import tariff.

Danny Schecter: Here’s where we disagree. It’s not just trade policy, because General Motors is a good example of a sort of a suicide machine, you know. Where they didn’t listen to people on terms of what kind of cars they wanted, they weren’t fuel efficient, they were making the Hummer in the middle of a crisis.

Thom: Actually people did want those things, that’s why they were buying them.

Danny Schecter: Well people want them to some degree, but the net effect of it all has been, in essence, to make the U.S. auto industry unsustainable. Also, you know, General Motors got into the sub prime lending business through it’s…

Thom: They’ve made a lot of mistakes. And their biggest mistake was failing to see the future, but to say that the cars they were making people didn’t want is wrong, they were selling like hot cakes until the price of gasoline went to 4 dollars a gallon, but that’s not the point. The point is that General Motors, and not just to pick on GM, there’s a whole bunch of these companies, but a good chunk of an American made car even now is actually made in China.

Danny Schecter: Well there you go, that’s the cost of the supply and demand and the fact of the matter is…

Thom: No! It’s because labor’s cheaper!

Danny Schecter: Without China, today I think we would be in a deep depression because China has at least bought our treasuries. They’re buying up our debt. They are maintaining our economy in many ways. I wish that wasn’t the case.

Thom: And that’s the result of Reagan borrowing 4 trillion dollars to try to make the economy look good.

Danny Schecter: It’s about wars as well, it’s about the cost of pouring money into the ground.

Thom: But forget about that, Danny. If we were to say to China, if we were to go back to the way it was when Sam Walton ran Wal-Mart, and everything in the store was 100 percent American made, if we simply said, “you know, we’re not going to bring this stuff into the United States anymore” or we will but we’re going to slap a 50% tax on it so it’s cheaper, it’s just as cheap to make it in the United States, you would have an entrepreneurial explosion in America as companies started reopening textile mills and computer factories.

Danny Schecter: Maybe so, but if you have no money, OK, as many people do not today, they are not going to buy goods that are going to cost more than what they can get in these imports. They may be subsidized, they may be cheaply made, but people are buying them.

Thom: Danny, I’ll pay 20% more for American made stuff at Wal-Mart if I’ve got a job that pays 40% more because I’m working here in the United States building it. Which is how it used to be.

Danny Schecter: The only problem is, how do we move backwards to an earlier time? I don’t think we do. I think we gotta move forward and I think we have to take into account globalization, and the role Wall Street is playing in all this. That’s my point. Thanks so much.

Thom: We’ll have to leave it at that., people can read Danny Schecter’s work, and of course, over at Common Dreams. Good talking with you, Danny.

Danny Schecter: Thank you. I appreciate it very much. And my new book is called "Plunder” by the way, it’s about our economic calamity.

Thom: "Plunder". OK. Great. Thanks, Danny. Good talking with you.


Thom: Rocket man! Well, that fits in perfectly with today’s crazy alert. Yep! The iPhone and Apple have approved a new application. You may now find the pot dealer near you. No, I’m not making this up. It’s actually only legal pot, it covers 13 U.S. States and a couple of countries. Legal cannabis coffee shops around Europe. You can use Google maps to find the directions. Actually kind of a cool little thing. I tell ya, with the family reunion over the weekend, I have never seen my brother Stan so drunk. He should have been smoking cannabis. It would have been much better for his liver. Fortunately it was his house that it was held at, so.

But, back to tariffs. Barack Obama, by the way, I just, I want to, see this is a piece of it, I mean, it’s part of a whole thing, which is making an economy that works for all. And although we’re still talking about employer-based healthcare, which is in my opinion a mistake, and we’re still not talking about single payer, this is a step in the right direction, and Obama says it’s got to have a public option:

"Any plan I sign must include an insurance exchange: a one-stop shopping marketplace where you can compare the benefits, costs and track records of a variety of plans – including a public option to increase competition and keep insurance companies honest – and choose what’s best for your family."

Thom: That was just a few hours ago. Got to have a public option. Yea, good one.

Transcribed by Suzanne Roberts, Portland Psychology Clinic.

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