Pat Buchanan published an opinion column on Friday that addresses the decline of the United States’ ability to support her interests in the world. As usual for Pat, it is an interesting read.
Buchanan links national influence and power in world affairs to a nation’s share of total world product - her manufacturing output, essentially. The United States’ manufacturing output has seen sharp decline in the last decade, and Buchanan includes a quote from Robert Pape of the University of Chicago which says, in part, “If present trends continue, we will look back at the Bush administration years as the death knell of American hegemony.”
To be sure, George W. Bush was the overseer of a period when American manufacturing, and the jobs linked to it, was being quickly exported to other nations with lower manufacturing costs, and he bears some responsibility for this. To lay the full blame for the manufacturing decline on his shoulders, however, is simply disingenuous. You cannot overlook the impact of NAFTA, which was negotiated by Bush’s father during his time in the Oval Office, and shepherded through the ratification process in Congress by Bill Clinton.
While China and other Asian nations have taken on much of the manufacturing for U.S. firms, a significant number of jobs have also been exported to Mexico by corporations looking to cut costs. The trend toward globalization of companies has pushed more and more manufacturing out of U.S. factories.
What can reverse this trend? One positive step would be a reduction of corporate income tax rates in the U.S. Present average combined federal/state tax rates for corporations rank as the second highest among major economic powers. (Only Japan has a higher total rate.) Even if a corporation operates in one of the three U.S. states without any corporate tax, the rate is still in the top four highest among major economic powers. Twenty-four U.S. states had combined corporate tax rates that would rank as the highest total. (The table on this page for more information.)
By any measure, the U.S. economy is a complex subject. While it is convenient to single out the actions of one individual as the cause of a particular trend, it is overly simplistic to do so. There are too many interdependent factors at work in driving economic decision making.
Until the U.S. can break free of the notion of “evil corporations” as the root of all evil, deserving to be punished through the tax code, we will continue to see our manufacturing base, and the jobs it produces, exported to other nations.
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