Globalization, Trade Policies Suffer in Information Vacuum

The Washington Times (Washington, DC), August 11, 2009 | Go to article overview

Globalization, Trade Policies Suffer in Information Vacuum


Byline: Alan Tonelson, SPECIAL TO THE WASHINGTON TIMES

Imagine a national health care debate in which interested parties such as the insurance companies monopolized the key data and released it only in the most self-serving ways. The chances of getting health reform right would be minimal.

America's long-standing debate on trade policy and globalization has been overshadowed recently by the health care battle, and, generally, by the Great Recession. But its importance must not be slighted by a country choking on debt largely because it has long bought much more from the rest of the world than it sells. And inexcusably, America's chances of getting globalization right are far too slim because interested parties - specifically, outsourcing-happy multinational corporations - have for decades monopolized the key data and released it only in the most self-serving ways.

Worse, the resulting information vacuum for the public and decision-makers is knee-capping policy-making in numerous high-profile areas, such as the auto-industry rescue programs and the Obama economic stimulus act itself. In particular, the country knows far too little about how truly American are the goods and services made by companies doing business in the United States. Thus, most Americans are just as ignorant about how these companies' operations actually affect U.S. growth and employment, and, therefore, about what policies will strengthen or weaken the economy.

The solution? A Truth in Output law. Require all companies with U.S. operations to disclose annually such information as the U.S. content of their products; their U.S. exports and imports; their domestic and foreign spending on procurement and research-and-development; and their U.S. and overseas employment and wage levels. Data should be required going back, say, 15 years, to make clear the trends. Resources to ensure adequate verification, and major fines for fraudulent reporting, are needed, too.

The globalization knowledge gap began flummoxing policy-making in the 1980s, when large companies from all countries began greatly increasing their production of goods and services outside their home countries, as well as the foreign content of their individual products.

The companies reaped big cost savings and other efficiencies. But policy-makers and voters confronted new difficulties in gauging the domestic effects of surging global trade and investment flows. The companies themselves, of course, knew everything about their new worldwide production chains. They couldn't make money otherwise. But although Washington gathered much of this information, the U.S. government released little.

The costs of this secrecy first appeared in the 1980s. Skyrocketing U.S. trade deficits and foreign-investment inflows raised the question of whether it mattered, and if so, how to respond. Many economists insisted that neither mattered in the emerging, allegedly borderless global economy. Others responded that knowing Who is us mattered crucially.

But this fascinating, important debate lacked factual moorings. The laissez-faire crowd has generally prevailed - partly because the federal government looked away as the U.S. and foreign firms taking that position published bushels of cherry-picked data.

But given the ensuing U.S. trade deficits and debts, has America really benefited? …

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Globalization, Trade Policies Suffer in Information Vacuum
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