British Prime Minister Tony Blair reportedly once asked German Chancellor Angela Merkel what accounted for the success of the German economy.
“We still make things, Mr. Blair,” she replied.
While the details of the encounter vary on the Web, the validity of her observation is indisputable. Germany is the world’s largest exportor, and it regularly runs trade surpluses with its trading partners — a stark contrast to the U.S. and Great Britain.
What’s more, both Britain and France were less affected by the recession of 2008-09, and each has emerged from the downturn more quickly than the U.S. or England.
France, by the way, is the second largest exporter in Europe and has run a trade surplus each year since 1992.
The U.S. last had a trade surplus in 1975, and our trade deficit has been climbing nearly every year since the 1960’s.
Maine has certainly felt the sting of foreign imports.
According to a Sun Journal “Looking back” column last week, 25 years ago a delegation of Mainers, include Ted Johanson, owner of Falcon Shoe in Lewiston, and Jeannie Hebert of Livermore Falls, president of the lobbying group Shoeworkers of Maine, were in Washington testifying before the International Trade Commission.
Subject: the surge of imported shoes into the U.S. market, which was closing shops and putting Mainers out of work.
Clearly, the hearing failed to save the industry. Falcon Shoe still exists, but there are only remnants left of Maine’s once proud shoe industry.
The threat in Maine today is the rapid growth of Chinese paper imports.
According to a policy paper from the pro-labor Economic Policy Institute, the value of Chinese paper entering the U.S. was $706 million in 2001. By 2008, it had grown to $2.8 billion.
The same group estimates that 23,000 papermaking jobs were lost over that period in the U.S., 9,400 of them in Maine. While those job losses are not all attributable to foreign competition or Chinese imports, they account for a significant number.
And, at the bottom of the China trade deficit, is currency manipulation, which makes Chinese goods of all types less expensive in the U.S., and U.S. goods more expensive abroad.
Ten years ago, American politicians were convinced that open borders and open trade would create well-paying jobs in the U.S.
That’s still a valid argument, but it assumes a level playing field between U.S. and its competitors, which the U.S. has failed to insist upon or enforce.
U.S. manufacturers face hefty hurdles — higher wages, unions, health care costs and environmental regulations, all burdens not shared by their Chinese competitors.
Add unfair currency manipulation into the mix and you can easily see why manufacturing jobs are fleeing our shores.
The bottom line is that wealth is created by what we produce, not what we consume. Until we restore some balance we cannot prosper.
If our federal government fails to act, tomorrow’s paper industry will look a lot like today’s shoe industry.