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Mar 11, 2009

As an economic solution, it could keep this recession alive for years.

By Alan Stoga

Rush Limbaugh, Mark Levin and other conservative noisemakers are having fun accusing President Barack Obama of being a socialist—which probably makes real socialists around the world roll their eyes in dismay.
However, the greater risk for all of us would be if he morphed into an economic nationalist, as is happening to much of the rest of official Washington.
Consider some facts.
The stimulus bill signed by the president included a “Buy America” requirement, as long as American-made products weren’t more than 25 percent more expensive than foreign-made products.
The $25 billion “green car” fund that was supposed to help move the country toward more energy efficient automobiles was expressly limited to the Detroit-based automakers.
North Dakota Senator Byron L. Dorgan, after trying for years, has finally managed to kill funding for the pilot program to allow Mexican long-haul trucks access to the United States.
Vermont Senator Bernie Sanders (who really is a socialist) and Iowa’s Chuck Grassley (a Republican) snuck a provision into the stimulus bill that prohibits banks that take TARP money from hiring foreign workers in the U.S. As a result, companies like Bank of America have already started rescinding job offers make to foreign-born students.
In the same spirit, Representative Dennis Kucinich has demanded that the banks stop lending outside of the United States. At a recent oversight committee hearing, Representative Kucinich asked a Treasury official, “are you telling the American people that it’s better to invest in another country than it is for these banks who have TARP money to invest in our own country?”
Unfortunately, the underlying sentiment would probably pass both houses by affirmation.
Similar protectionism-by-another-name is growing around the world. British Prime Minister Gordon Brown has been pushing a “British jobs for British workers” campaign. French President Nicolas Sarkozy told French auto companies to close plants in Eastern Europe in order to preserve French employment. And the Chinese are letting their state companies, as well as provincial and local governments, impose severe local content rules, locking out foreigners.
What about Obama? The good news is that his presidential rhetoric has been far more pro-trade and pro-free market than his campaign rhetoric. The bad news is that he has yet to take a real leadership role—at home or abroad—to stop the slide toward a 21st century kind of trade war.
The president’s big chance is coming when he travels to London early next month for a G-20 summit that is supposed to define a global response to the crisis.
Let’s hope Obama doesn’t channel Franklin Delano Roosevelt when he gets there. In 1933, Roosevelt told a similar London conference, “I shall spare no effort to restore world trade by international economic readjustment, but the emergency at home cannot wait on that accomplishment.”
That opened the door to all sorts of “Buy America” policies—and helped keep the Depression alive for almost 10 more years.


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