Blumneconomics XI: the auto industry

Robyn "Blumnata" Blumner of The St. Petersburg Times has a record when it comes to columns that deal with economic issues.

The record is not good.

This week, Blumnata pontificated about the auto industry and rendered her obeisance to Barack Obama, aka "The One." The result does nothing to improve her record.

The column starts with the sad story of an electronics plant in Tampa that is expected to close because Mexicans can do the job more cheaply. Yes it's sad that Richard Neal might lose his job to Mexicans who do it for less. But if U.S. auto makers can't compete with foreign auto makers who utilize cheap labor then the former will continue to lose market share and Neal loses his job anyway.

So immediately we have the expected tip-off that Blumner blindly favors the U.S. worker on the basis of protectionism--one of the strategies that helped hollow out the bottom of the Great Depression.

If jobs — and the creation or retention of 2.5-million of them — is a major plank of an incoming Obama administration, then preventing good manufacturing jobs from leaking to other countries should be front and center.

Look, can't the man just finish his waffle?

Obama truly has his hands full with economic policy. His tax policies promised to tie up capital, so he promptly waffled on them in light of current economic conditions. Obama wants to increase corporate taxes--exactly the sort of thing that makes taking operations overseas more attractive. If he knows what he's doing then he can't make good on certain major planks, and I look forward to Blumner's reaction when the realization hits.

After another paragraph or two of Bush-bashing, Blumner prostrates herself again on the prayer rug:

But Barack Obama isn't so blithe toward this hemorrhaging of decent, middle-class jobs. In his acceptance speech at the Democratic National Convention in Denver, Obama vowed to: "Stop giving tax breaks to companies that ship jobs overseas" and "start giving them to companies that create good jobs right here in America." It was a campaign theme, but there hasn't been much meat on those bones as yet.

I'm not sure how much meat Blumner expects before January. It will take a substantial tax break to keep Detroit's Big Three competitive in the automaking world in addition to loan money unless the companies are allowed to compete on something resembling equal footing with foreign auto makers. I'd expect Blumner to howl in protest about corporate tax breaks or bailout money. Perhaps it's different if Obama does it as opposed to Bush. Perhaps the idea is for the tax breaks to get passed on to auto workers in the form of higher wages (which is in effect a federal subsidy of auto workers).

What I would like to see is a little good old-fashioned American job protection built into these massive bailouts we taxpayers are funding.

There it is in black and white. Blumnata thinks that protectionism is good. While there might be particular instances in which protectionism serves a useful purpose, the general idea of protectionism if flatly stupid during an international recession. It primarily accomplishes a reduction in the benefits nations receive from trade. And it wouldn't surprise me at all if Blumner knew absolutely nothing about the basic economics of guns and butter.

Bottom line: This leftish cheerleader wants policies that will worsen the economy.

And somebody lets her write a column at a major daily newspaper.

But let us return to the blather:

How about a new twist on the Buy American Act? That Depression-era legislation — now loophole ridden — requires that U.S.-produced products get preference when federal funds are expended.

Apparently it never dawned on Blumñata that the legislation occurring during the Great Depression was more than a coincidence. The protectionist policies of the Great Depression were begun under Herbert Hoover (Hawley-Smoot) and generally continued under Franklin Roosevelt. Unemployment never dipped below 14 percent under Roosevelt until World War II.

Talk about viewing the past through rose-colored glasses.

You want taxpayer money? Then don't buy additional parts from a factory built right over the border for the sole purpose of paying workers one-sixth what an American would make.

Yet, when Sen. Sherrod Brown, D-Ohio, pointedly asked the CEOs of the Big Three if they would agree, going forward, not to purchase foreign-made auto supplies at levels any greater than before a rescue, they all refused.

The explanation is simple: They aren't that stupid.

Economic upheavals are times of terrible dislocation, but they also present opportunities. We know what happens when government's sole concern is the protection of capital and its free flow — we're living it. Now the pendulum has to swing back to where labor interests and job protection become part of the policy equation.

Labor Unions enjoyed considerable influence during the Depression years, as did protectionist policies. We don't want the pendulum to swing back to double-digit unemployment, do we?

If The St. Petersburg Times editorial board weren't the ideological equivalent of the Biodome (self-contained and free of outside contamination) then maybe somebody could stop Blumner from wearing her economic ignorance on her sleeve.