“Has free trade been good for America? Robert Reich says yes, Pat Buchanan a resounding no.” October 9th, 2007
[SOURCE: 'Hardball with Chris Matthews' for Oct. 8]
CHRIS MATTHEWS, HOST: And up next, the HARDBALL debate tonight. Coming up: Has free trade been good for America? Robert Reich says yes, Pat Buchanan a resounding no. Wait until we hear the debate.
You‘re watching it, HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
REBECCA JARVIS, CNBC CORRESPONDENT: I am Rebecca Jarvis with your CNBC “Market Wrap.”
Stocks closed mixed in relatively light trading this Columbus Day. The Dow Jones industrials lost 22 points. The S&P 500 fell five. But the Nasdaq gained seven points.
After the closing bell, Yum! Brands, the parent of KFC, Taco Bell and Pizza Hut, kicked off third-quarter earnings season, reporting earnings that beat analyst estimates.
And Google shares hit a record high, crossing the $600 mark for the first time ever. Some analysts the Internet giant hitting $700 in the next year.
Meantime, oil prices took a big drop, falling $2.20 in New York, closing at $79.02 a barrel.
And just two weeks after a strike against General Motors, the United Auto Workers union gave Chrysler until 11:00 a.m. Wednesday to agree on a new contract. Talks continue.
That‘s it from CNBC, America‘s business channel—now back to
HARDBALL.
MATTHEWS: Welcome back to HARDBALL, reporting tonight from Dearborn, Michigan, ahead of tomorrow‘s Republican debate here focusing on economic issues.
A new poll shows that most Republican voters believe free trade now is bad for the U.S. economy, about 2-1. And most of them would support a candidate who favored tougher regulations to limit foreign imports. Is free trade hurting or helping America? That‘s the HARDBALL debate right now.
Pat Buchanan is an MSNBC political analyst. And Robert Reich is a former labor secretary under President Clinton. And he‘s the author, by the way, of a new book, “The Supercapitalism”—“Supercapitalism,” rather.
Bob Reich, sir, Mr. Secretary, are you still a free trader?
ROBERT REICH, FORMER LABOR SECRETARY: Well, I‘m still a free trader, although I will tell you, Chris, it is becoming—there are fewer and fewer of us. It‘s a very unpopular position.
In Michigan, you can find almost as many free traders as you can chicken hawks. There are not many. The trouble is that most people blame free trade and blame free trade for the failure of American middle class to expand, the decline of middle-class wages, all of the problems, the economic problems, we have.
And I expect that Pat Buchanan is going to be one of those.
PAT BUCHANAN, NBC POLITICAL ANALYST: Well, let me respond…
MATTHEWS: And here he comes to prove your point.
Pat Buchanan, respond.
BUCHANAN: Sure.
(CROSSTALK)
MATTHEWS: Is free trade killing America?
BUCHANAN: Well, let me—Bob Reich and I debated NAFTA just before it passed back in 1994.
And we were told wonderful things would happen. I will tell you what happened. Since then, we have run $500 billion worth of trade deficits with Mexico, $60 billion record trade deficit last year. Mexico exports to the United States half again as many automobiles as we export to the world.
China is now growing at 12 percent. We have a $233 billion trade deficit with them, fastest growth in the world. They have been growing at 10 percent. We grew in the first half of this year at 2 percent. We have lost three million manufacturing jobs since George Bush took office, one in every six.
If that is a successful trade policy, Mr. Reich or Dr. Reich, give us the statistics on failed policy.
REICH: Well, Pat, I love to debate you from the right. I so rarely have the occasion to debate somebody on the right.
BUCHANAN: You‘re not on the right.
(LAUGHTER)
REICH: But let me—let me just tell you something.
I mean, we assumed—and you—when you and I debated NAFTA, you said that all of the manufacturing jobs were going to go to Mexico. Actually, we were both wrong. They went to China. And the fact is, the American economy is much larger today than it otherwise would have been without free trade.
The problem is that a lot of the benefits of free trade have not gone to the people who had used to be manufacturing workers. But those manufacturing workers might have lost their jobs anyway, Pat, because, if you look in a manufacturing plant today, the most modern, up-to-date plants, and you see how much automated equipment is in there, robots, numerically controlled machine tools, there are very few workers. The assembly line is a thing of the past in most manufacturing facilities.
BUCHANAN: But, look…
REICH: So, even if we didn‘t trade, technology would be taking away most of those jobs anyway.
BUCHANAN: But, look, automation, there‘s no doubt about it, and technology do decrease the number of jobs. But building robots and things like that, they could be done by American workers.
Look, let me ask you, Bob. Look, take the automobiles. I think Japan and Korea export three and four times as many automobiles to us as we—or 16 to 20 times as many cars to us as we do them. Why?
Because there‘s an unfair trade situation going on. They impose back taxes on our cars coming in, and they rebate them on their cars going out. It has the same impact as a tariff.
(CROSSTALK)
REICH: Pat, you‘re talking…
(CROSSTALK)
REICH: Wait a minute.
(CROSSTALK)
MATTHEWS: Who makes the better car right now? Who makes the better car, the Japanese or the Americans, Bob?
(CROSSTALK)
REICH: Pat is talking about—Pat is talking about taxes and about tariffs.
Look it, I say let‘s level the playing field in terms of let‘s make sure that the tax rates don‘t bias against the United States. Let‘s make sure China revalues its currency, so they don‘t have a built-in bias against the United States.
(CROSSTALK)
BUCHANAN: Bob Reich…
REICH: But if you look at the—wait a minute, Pat—look at the Japanese cars made in the United States by American workers…
BUCHANAN: Sure.
REICH: … and you will find a lot of Americans will vote for those Japanese cars made in the United States, because a lot of Americans think that they‘re better quality.
BUCHANAN: Yes. And you know why? They‘re less expensive, because they don‘t costs of health care and pensions.
And General Motors and Chrysler are dumping them. That‘s what happens when you kill American companies in the United States. You dump their workers off health care and pensions, so they go to the federal government and they go back to the Democratic Party.
Look, China…
(CROSSTALK)
REICH: Wait a minute.
BUCHANAN: Look, China, you say revalue their currency. Why should they? They‘re beating the daylights out of us.
REICH: But wait a minute.
(CROSSTALK)
MATTHEWS: Pat, do you think…
(CROSSTALK)
MATTHEWS: … quality check here. I‘m sorry. I have to ask it.
The American consumers are pretty picky. They pick the car they want to buy. Of course they look at price.
But, Pat, are you saying that we‘re making a better car and yet people are buying Toyotas?
BUCHANAN: No. They…
(CROSSTALK)
MATTHEWS: Why do you think people are buying Toyotas?
BUCHANAN: They make an excellent car, there‘s no doubt about it, in Korea. There‘s no question about it. They export them here.
And, look, they don‘t carry the burdens that an American car carry. An American car, Chris, carries the burden of Social Security taxes, federal taxes, all these other taxes in its price, and the health care and benefits of American workers.
(CROSSTALK)
BUCHANAN: You let this stuff come in, you will kill these companies, and those workers will go to Wal-Mart, and they will not be paying those same taxes. Free trade…
(CROSSTALK)
REICH: Wait a minute.
Pat, you‘re talking—we‘re not talking about trade. You‘re talking about an unfair advantage because a lot of big American companies have health care agreements with their unions.
BUCHANAN: And they have high wages.
REICH: I would say—I don‘t know if you agree with me, Pat.
(CROSSTALK)
REICH: I think we ought to decouple health care from employment. We ought to have a national, affordable health care system.
BUCHANAN: Sure, and have the federal government do it.
REICH: And we shouldn‘t—employers should not be providing health care.
BUCHANAN: Sure. You have a federal health…
(CROSSTALK)
BUCHANAN: Look…
MATTHEWS: Mr. Secretary, let me ask you the one question, the same question to Pat.
What car do you drive? What do you own?
REICH: I have a Mini Cooper.
BUCHANAN: What is that?
MATTHEWS: And that‘s a BMW, right?
(CROSSTALK)
REICH: A Mini Cooper is a little tiny car that only I can fit in.
(CROSSTALK)
BUCHANAN: I have got a Navigator.
MATTHEWS: No, it‘s a BMW. It‘s a German car.
What do you own, Pat?
BUCHANAN: I own a Navigator.
REICH: No, it‘s actually made—it‘s actually made in—in London.
BUCHANAN: OK.
REICH: And parts are—parts are made in the United States.
BUCHANAN: I own a Navigator and I own a Cadillac. That‘s what I own, two American-made cars. I went to buy a great big TV set—
MATTHEWS: When did you switch from the old sky-blue—
(CROSS TALK)
REICH: Can I ask Pat a simple question? Pat, what‘s your definition of American-made. You have a lot of Toyotas and a lot of Nissans made in the United States today. You have a lot of American cars that have foreign parts. What‘s made in America?
BUCHANAN: How do you defend free trade when it killed our TV industry, took away half of our auto industry, took away half of our airline industries and Boeings planes are now made, the best parts of them, in Japan. Is that good for America?
REICH: Well, I want you to define what an American product is, Pat. You said Boeing planes are now made in Japan. A lot of American cars by Toyota are made here in the United States. I don‘t know what you‘re talking about in terms of what American competitiveness is.
BUCHANAN: What is best for the big companies is not what is best for the country.
REICH: I agree with you on that.
BUCHANAN: The two have separated and all these trade deals are enabling acts for companies to get rid of their American workers, go over to China, make their products cheap, move them back in here free, and pocket the difference. That‘s why the—
REICH: Wait a minute. Pat, I will agree with you on one thing and that is that big companies and the interests of Americans are different. But I also disagree with you on the notion that Americans are not getting good deals from around the world. You go to Wal-Mart—how do you suppose Wal-Mart keeps prices so close? I‘m not defending Wal-Mart. I don‘t like Wal-Mart.
But why is Wal-Mart able to keep prices so low? Because Wal-Mart gets a lot of stuff from overseas or Wal-Mart‘s suppliers get a lot of stuff from overseas.
BUCHANAN: I‘ll tell you why, because China has a devalued currency.
But let me tell you this: why is the American dollar sinking like a stone? Because we have 850 billion dollar merchandise trade deficit, year in, year out, year in, year out. No country has ever survived that for a long period of time. You wait—
(CROSS TALK)
BUCHANAN: Those prices at Wal-Mart are going up and you know it.
REICH: Pat, you think our living standard would be higher if we stopped trading and we put a wall around the United States and said we won‘t trade with anybody? What kind of economic illogic are you basing that on?
BUCHANAN: I‘m telling you, you can do this stuff for a couple of decades, but that Chinese goods—when you revalue the Chinese currency, which way do you think the price of those is going? You know it‘s going up in Wal-Mart. It‘s going up in all of those things.
We are destroying our currency instead of putting tariffs on things.
REICH: Pat, your arguments are going at cross purposes.
BUCHANAN: What do you mean?
MATTHEWS: Let me jump in here, Pat. What about the argument that even though the price of oil has gone up, and our dependence on oil from the Middle East and elsewhere has driven up the price of oil, and the amount of money we have to spend on it, that we‘re getting such a break on goods from the Far East that it‘s offsetting that.
BUCHANAN: Chris, there‘s no doubt about it. When you start—the initial benefits of free trade come immediately in the first couple of decades. You get rid of your American factories, your jobs, your technology, ship them over. They make the stuff much more cheaply. It comes in here. We buy it cheaply.
You keep doing it and doing it. We have run five trillion in trade deficits, Chris, in the last 15 years, cumulative. The dollar is sinking. You can do this for a while. But after a while, those folks—you know what they are going to say, we don‘t anymore more dollars.
REICH: Pat, the dollar is sinking because Americans and particularly wealthy Americans are living beyond our means, because we have a federal deficit, because corporations are deep in debt, because we live in debt.
We have a credit card society and any IOU—and that‘s what the dollar is
that‘s laden with that much debt is going to sink.
MATTHEWS: My judgment here is that Pat Buchanan is absolutely sure of himself, and Robert Reich is using intellectual arguments. But he‘s not so sure of himself on this issue anymore.
REICH: I‘m absolutely sure of myself. I‘ll tell you, what I‘m also sure of though is that most Americans are shifting toward the Pat Buchanan view of trade. I think that‘s dangerous, frankly.
BUCHANAN: It‘s not my eloquence. It‘s because they see the consequences in town after town after town and community. They see the jobs going. They read the papers. It wasn‘t because I was up here, me and Ross Perot making the case, like the “Wall Street Journal” said. They have seen the consequences, Bob. They don‘t want the Democratic party—they don‘t want—
MATTHEWS: We have to go. Gentlemen this is the debate—
REICH: I was about to give you the reason. This is very important.
MATTHEWS: OK, quick, Bob. I‘m sorry. Go ahead.
REICH: I think Americans are insecure and a lot of that insecurity comes from the fact that it‘s not just—it‘s not just globalization. It‘s also technology. It‘s the way corporations are treating a lot of workers. Instead of treating them as assets, they‘re treating them as disposable units. That‘s not trade. That‘s not the problem of trade. That‘s the problem of how Wall Street is now operating.
BUCHANAN: And their government doesn‘t care about them. It cares about the Fortune 500.
MATTHEWS: This is the best debate we‘ve had so far. But it has to end for tonight, at least. This will continue, the great American debate right now, trade. Pat Buchanan and Robert Reich. Bob‘s new book is called “Super Capitalism.”
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