It’s not the French; it’s US

Our McCain ad [1] struck a chord, eliciting both reason and vitriol. It strikes me that it is worth being clear what the ad says and doesn’t say.

Other than the bad French accent, it isn’t anti-French, xenophobic or “racist.” It doesn’t accuse the French of taking jobs from us. It features a Frenchman hailing Sen. John McCain for bringing jobs to France. There is a fundamental difference.

And that is the point. We've run a massive and unsustainable trade deficit. Despite a falling dollar and rising exports, we’re still selling off or borrowing about $2 billion a day to cover that deficit. One in five manufacturing jobs has been lost over the past eight years. And as even apologists of our current trade policies admit, this contributes big time to the stagnation of U.S. wages.

This isn’t the fault of the French, or the Chinese or the Arabs – nor does the ad suggest that. It is the responsibility of the U.S. to figure out its strategy in a global economy. Thus far, our strategy has been defined by, for and of the multinationals. They have used globalization to drive down wages and regulation here and abroad. That’s why China—which offers cheap, disciplined labor, bans independent unions and cashes in its environment —is a favored spot for U.S. investment. That’s why the U.S. Chamber of Commerce in China lobbies against greater rights for workers in that country.

Moreover, this surely isn’t about “competition.” Airbus only exists because European countries decided, as a matter of their industrial policy, to provide it with massive subsidies. Boeing and U.S. air manufacturers prospered because they gained massive subsidies from this country. The notion that a bidding contest between Boeing and EADS is some form of Adam Smith market competition is frankly risible.

Many market fundamentalist economists argue that the Europeans made a mistake in subsidizing Airbus, and that the U.S. benefits by allowing them to make the airplanes and pocketing the benefits of those subsidies. That attitude has played a large role in informing U.S. trade policies. It is the attitude that undergirds McCain’s purblind support for trade accords defined by global corporations to protect property rights and not worker rights or the environment.

We disagree. We think the U.S. has to have a national trade strategy in a global economy. In key industries, our capacity to make things here matters. Those who make the current generation of advanced products are the most likely to assemble the capital, invention and hands-on machinist and engineering experience vital to creating the next generation. The innovative economy doesn’t exist in a vacuum or a think tank. For the U.S. to compete on the high end of the global economy requires us to be serious about sustaining advanced manufacturing and technological capacity here in the U.S. Failing to figure out that strategy will leave U.S. workers in a race to the bottom, hollowing out the middle class that is this nation’s triumph. Then we’ll see a reaction that will make all of us shudder.

The military is where most countries start. Obviously, sustaining key military manufacturing capacity is in the national interest. This isn’t to sing hosannas to the Boeings, et al. or to sign up to our bloated military budgets or our global empire of bases. Moreover, as long as these oligopolistic manufacturers aren’t nationalized, they will seek to take advantage of their status—by corrupting the procurement process (e.g. the Boeing tanker deal), by pushing for cost-plus contracting (e.g. Halliburton, et al.), by seeking to privatize functions that should be part of the military (e.g. Blackwater et al. in Iraq). Constant scrutiny, oversight, investigation, etc. is vital – and will always be at risk of being corrupted by lobbyists, campaign contributions, the full catastrophe. That will be true of this deal and others deals going forward, as these companies are expert in playing the Pentagon for add-ons and costly contract renegotiations.

The EADS deal exemplifies the lobbying and campaign contributions that corrupt the process—despite McCain’s pose as a white knight. It reflects McCain’s lack of concern for U.S. workers. It illustrates the struggle we will have to develop a sensible economic strategy for the country. That isn’t isolationist; it is premised on a global economy. And it isn’t xenophobic or anti-French. It isn’t their failure; it’s ours.