10.12.2012 in Big Government, Featured, Green/Environmentalism, Politics by Bill Wilson 3

Obama’s ‘green’ trade war

By Bill Wilson — Can you say Smoot-Hawley?

Photo: Energy.gov (flickr)

Not content with Ben Bernanke’s currency war — which attempts to cheapen prices for U.S. exports overseas by devaluing the dollar — the Obama Administration has decided to go for the real thing, slapping new tariffs on Chinese solar imports.

As reported by Reuters, the U.S. Commerce Department accused China of “‘dumping’ solar cells and panels in the United States at prices 18.32 percent to 249.96 percent below fair value” and is setting “additional countervailing duties ranging from 14.78 to 15.97 percent to combat Chinese government subsidies, significantly higher than preliminary levels.”

The U.S. has already slapped duties on Chinese-made wind turbine towers, too, reflecting White House unease with the costs of making “green” energy here in the U.S. — Chinese companies are producing the same solar panels and wind turbines for pennies on the dollar compared to their U.S. counterparts.

But the new policy still will not create “green” jobs in the U.S.

Manufacturing in emerging economies in recent decades has simply been more cost-effective, and with jobs shifting overseas. In 1979, 19.5 million Americans worked in manufacturing. Today, it’s just 11 million.

That trend will only be addressed by addressing the high cost of doing business in the U.S. — through lower taxation and a strong dollar — not by sparking a trade war.

All the Administration is accomplishing is to force American companies and consumers to pay extra for foreign solar and wind technologies, and in turn to pay more for overpriced U.S.-made goods. All parties will be hurt in the process.

Meanwhile, Obama’s apparent strategy for converting the U.S. to a “green” economy is to make alternative solar and wind energy more expensive. On its own, the move might actually have made conventional options for electricity such as coal more attractive.

But Obama is trying to drive up prices there too.

According to Department of Energy’s estimates, by 2017 the cost of coal per megawatt hour will triple from about $35 to anywhere from $97 to $139. This comes on the heels of Obama policies to require existing and new coal-burning power plants to use pricey “green” technologies that will cost consumers billions of dollars extra every year.

So, the only way the Department of Energy’s 2017 projection can show alternatives like wind and solar to be viable is to triple the cost of coal. No word yet from the Department on how Obama’s “green” trade war with China will impact wind and solar prices.

Meanwhile, although Federal Reserve quantitative easing programs have seemingly boosted U.S. exports, this has been more than offset by higher oil prices paid to energy exporters. The trade deficit has actually increased as Americans pay more at the pump.

If we’re in a trade war, we’re apparently losing.

In the Great Depression, the Smoot-Hawley Tariff Act was enacted to make imported goods imported more expensive. The thought was to incentivize the purchase of U.S.-made goods during a devastating economic downturn.

It only made things worse. U.S. exports took a big hit immediately as the world retaliated, dropping from $3.84 billion in 1930 to $2.08 billion in 1931, and bottoming out in 1932 and 1933 at $1.61 billion and $1.67 billion.

Now Obama is attempting to do the same thing again. For someone who has repeatedly reminded us that we are in the worst economy since the Great Depression, it seems Obama and his Administration have not learned a thing from the Depression’s history.

Bill Wilson is the President of Americans for Limited Government. You can follow Bill on Twitter at @BillWilsonALG.

  • daveveselenak

    Let me be clear: the only green that the fuhrer is truly concerned about is the “greenbacks” that are making their way into his and his minions pockets! Bye bye middle class and hello serfdom! BAA,BAA, we want OBAA-BAA-MA, say the stupid sheeple who evidently want to be sheared!

  • topeka

    All good points,

    But like the Smoot-Hawley Tariff Act: Import duties on Chinese goods are only a symptom of the disease.

    If an American company produced Solar Panels for less than the Chinese – ones which actually worked efficiently and for which there was a market demand – the American company would have the Choice of either being TOTAL EVIL CORP. (aka Umbrella), or donating large sums to the Left, hiring a Progressive CEO, picking an HQ in Palo Alto, and then hiring the Chinese to manufacture the panels. Refusal to go along would mean the Chinese would steal the technology, the Americans would be lucky not to pay the thieves for infringement, the Americans would go through endless eco-impact studies until some Error Breakovitch sued them for causing cancer in moonbats, and Aids in Thai, male prostitutes. The Americans would then be rung over the EEOE coals, and Unionized. By the time the Left was done, a Chinese GSE, with its Communist-Bizzillionaire would be selling the panels to a front for Buffet, or some other Left-wing-bat contributor, and the original inventors would be lucky to still have their shirts.

    Now – you may think I’m making this up – but it actually happened to my Uncle and his partners. Just change the names, and there you have it. I could tell you what his firm invented – but then we’d all have to die – never mind the Russians put it on the market (and it has since been replaced, this is about 15-20 yrs ago).

    I have a name for this – I call it Surrenderism – the process of leaving no successful American business alone.

    If there were Absolute Tariff walls up – it certainly would be bad news. But if there were Absolutely NO Tariff walls up – there would be very little difference for most of us from the former scenario.

    To “defeat” the Chinese serf-slave machine, we have to free ourselves from our own chains. Under such a scenario, we might need to drastically alter our membership and participation in the oodles of trade treaties we have, and retain the right to sue certain pirates of IP – or at least not let them have a one-way, lawsuit mill against us. (Yeah, I know, like that will happen over the bodies of half the Lib-tard Trial Lawyers…but engineers would call it a good start.)

    We could also use a “transparent” marketplace. If a non-union American coal mine has an accident – it’s front page for weeks. And the state is all over them and their customers like tics on a dog. But the Chinese operate some of the most obscene factories and mines on the planet. (Albeit, they actually have been improving conditions – seems those “low” skill jobs require functional people with higher skills.)

    As for the currency exchange rate… the Masterminds agreed to do nothing about this even back in Reagan’s time when the Chinese invented it. The idea that an hour of Chinese welding was worth 1/8 of an American welder, and 1/24 of a Union welder should have been seen as a CROCK even in ’82 when their welds weren’t worth a crock. Remember slavery, equality, yada, yada? Now that you’d have to call China to find experienced people in a host of occupations (unless you’re just hiring one old fart for an afternoon), what did you expect?

    When I trained my first Chinese counterpart (’92 I think), the guy knew Jack, and that was about it. Today, most of our schools in my field don’t even have labs – and the Chinese have built an industry over there unheard of here. Our employment dropped 50% – their’s skyrocketed. They now employ more of my kind of engineer than we have metrosexual software geeks writing code. Period. That’s what 20 yrs of work does. And the guy had such problems… in ’92 … where to park his BMW, the crowd at the pool, finding a spa that his wife liked, the view from his 22nd story, 3 bdrm condo, geesh, oh the humanity… (he was an engineer, not an assembler on a tinker toy line, get it?)

    Any who… blaming the Chinese for our problems will not solve our problems, and it won’t help them either.

  • topeka

    btw – none of this is to imply criticism of Bill’s column.

    Bill is quite right.

    Simply pointing out that tariffs are just one symptom of the disease America is mired in. (And tariffs, obviously, are just one symptom of the trade war disease.)

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