Senator Shelby has – through the Senate Banking Committee – tied up the appointment of a Mark McWatters to the Board of Directors of the Export-Import Bank. Goodness, Washington is sooo dysfunctional! What in the world is Senator Shelby doing?

Here’s what.

By stalling McWatters’ appointment, the Ex-Im Bank’s Board of Directors now lacks a quorum and cannot provide credit guarantees (taxpayer-subsidized loans in other words) for individual loan amounts exceeding $10 million. Which is the vast majority of loan guarantees that the Ex-Im Bank provides.

Here’s why Shelby is doing this.

America’s global corporate giants use lower-than-market interest-rate loans to subsidize their overseas business, courtesy of the US taxpayer. The problem is, they are moving jobs overseas – a free market prerogative – with government assistance – not very free market. Much of the investment and jobs overseas goes to – you guessed it – China.

Oh. China is winning. Global corporations are winning. American taxpaying workers are losing, because of the subsidies they are unknowingly providing through the Ex-Im bank. Trump couldn’t have had a point. Could he?

Free trade is an idea, towards which elaborate, detailed trade agreements pledge a certain commitment. There is no such thing in reality as true free trade, only a web of complex regulations. Sometimes bilateral. Sometimes multilateral. Put together by teams of highly paid experts: business consultants, lawyers, economists, and other experts who earn more than a highly skilled worker could dream of. They meet in exclusive locations, and stay in posh hotels, and decide the fate of jobs in America and around the world.

This is not free trade. This a world wide web of crony capitalism. Well-educated, bright, very well-paid networks of cronies. Yes, business does sometimes tend to network that way in this world. But this goes further than that. It uses government to subsidize investment abroad. Global corporations also push for similar Ex-Im Bank style programs in foreign countries. To get them subsidies when they leave America, and to garnish subsidies when they open for business in China. Nice deal.

Not every worker can retool their career to qualify for only the highest-value manufacturing products at home in America. That’s wrong. MOST workers have a tough slog retooling their careers after a factory shuts down. Not their fault. Rather, it’s the demands to re-educate and relocate are a wall too high to climb for many. Especially when foreign-worker visas continually bring in more relatively cheap competition for whatever jobs are left behind.

Clyde Prestowitz has been clearly stating that the huge expansion in trade agreements in the post WW II era was motivated by geopolitical aims, using economic theories as a justification. Nations like Japan and Korea, and now China, however operated within this free-trade framework, by using a mercantilist strategy. Protecting local industry until it reached sufficient scale to compete with America. Much like America did throughout the 19th century with regard especially to the UK. Cars, Computer Chips, Steel: the Asian giants have used local protection at home to build a base to conquer an open and welcoming American economy.

And now China, which has never reformed politically unlike Japan and Korea, has emerged using the same mercantile strategy. It is a tilted playing field, which means two main responses: either continue making free trade agreements like TPP, and hope China becomes a better world citizen. Both economically by opening up it’s still relatively closed domestic economy, and politically by reforming it’s communist political system. Good luck with that.

Or by admitting that it’s a geopolitical game we’re playing, and admitting that America has allowed a lot of cheating to go down. Both within and outside of it’s frayed borders.

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