[VIEWPOINT]Logic the loser in politics

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[VIEWPOINT]Logic the loser in politics

Foreign policy occasionally exerts a decisive influence in American presidential elections. Conversely, the electoral process at times exerts a none-too-subtle influence on the content of American foreign policy. In the quest for the nomination, for example, candidates vie for the support of their party’s most loyal constituencies. Democratic contenders typically tack to the left during the primary season, Republicans to the right. This, ironically, is where China’s most fervent detractors are to be found.
And this is perhaps the reason why so many presidents come to office with a legacy of campaign rhetoric destined to complicate U.S. relations with China. President Reagan arrived in Washington in 1981 criticizing existing limits on U.S. arms sales to Taiwan. A year and a half later, his administration defused a crisis with Beijing by accepting more explicit restrictions on such sales. George H. W. Bush sought to boost a faltering campaign in 1992 by announcing a huge sale of F-16s to Taiwan, calculating that this decision would appeal to the party’s conservative base while bolstering economic prospects in states critical to his election. He expected China’s leaders to cut him some slack for a decision they obviously found objectionable. He did not need to cope with their reaction, because he lost the election. His opponent in that campaign, Bill Clinton, had denounced China’s leaders as “the butchers of Beijing.” Within a few years he had elevated them to “strategic partners.” George W. Bush in turn described China during the 2000 campaign as a “strategic competitor” and implied a more indulgent attitude toward Taipei. Yet following the 9/11 terrorist attacks, the President invited Zhang Zemin to his Crawford ranch and asserted, without contradiction from critics, that Sino-U.S. relations had never been better.
One should, therefore, neither be especially surprised that a China issue has emerged in this campaign, nor that Democrats are raising it. They, after all, are the party engaged in a nomination fight. The issue this time is jobs. The rhetoric is hot and heavy, though the logic underlying it is elusive.
Firms that have outsourced employment are being described as traitors. John Kerry and John Edwards, pandering to the party faithful ― particularly the manufacturing unions ― are feverishly denouncing the North American Free Trade Agreement, pledging to review all past trade agreements, and promising to approach future negotiations as an opportunity to raise foreign wages and environmental standards rather than remove impediments to international trade. Nor has President Bush been immune to protectionist sentiment, having used steel tariffs and agricultural subsidies to buttress support among voters in the Rust Belt and the farm states.
Many politicians regard Beijing as a potential scapegoat for the “jobless recovery.” But economic logic is the real victim. Though China runs a large trade surplus with the United States, its commerce with the world is roughly in balance. Beijing, moreover, is recycling the proceeds of its ample surplus into the U.S. treasuries market, thereby helping to offset America’s miniscule savings rate and finance our global current accounts deficit. China’s growing trade surplus with the United States, moreover, is substantially a reflection of the continuing relocation of production facilities to China by its Asian neighbors. The jobs being displaced in this process are principally Taiwanese, South Korean, Japanese, and Southeast Asian. Imports that previously came to the United States from other nations are suddenly showing up in China’s column.
We export to earn the foreign exchange with which to pay for imports. Imports obviously provoke adjustment problems, but neither rising productivity nor increasing imports undermine overall employment so long as the labor market remains flexible. And despite the political rhetoric, unemployment in the United States is falling ― from 6.3 percent to 5.6 percent in the past year ― although not fast enough to relieve worker anxiety or temper political rhetoric.
The sluggish growth of employment in the United States can best be overcome by sustained growth in demand. Arguments about NAFTA and a retreat from free trade principles do nothing to foster demand growth. A retreat to protectionism would imperil, not enhance, the welfare of Americans. And it would be feckless to attribute the weakness of U.S. job growth to an emerging Asian power which is seeking to integrate itself into the global economy while cultivating closer ties with its neighbors and with the United States. Will such logic prevail in the coming campaign? I hope so, but won’t count on it.

* The writer, a former U.S. ambassador to Japan, is a professor at Stanford University.

by Michael H. Armacost
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