Jack Davis, the isolationist who attempted to unseat Rep. Tom Reynolds last November, blames trade for virtually all our economic problems. Although his intentions are good, his trade policy recommendations, if implemented, would be disastrous.

In attempt to isolate producers from foreign competition, Mr. Davis would raise import barriers. In response, foreign countries would retaliate by keeping U.S. products out. This would significantly damage the transportation equipment industry, Buffalo-Niagara's largest manufacturing employer that heavily relies on sales to Ontario auto factories.

Other important industries would also suffer. Why? Buffalo-Niagara's largest manufacturing sectors are among the state's top export industries. And trade in New York, the third largest exporting state, directly supports more than 280,000 higher-paying jobs, according to the Census Bureau. Plus, a tremendous number of jobs are dependent on service exports. If state exports decline, local jobs will be lost.

Higher tariffs would also hurt local families by making imported consumer products more expensive. In turn, less income would be available for education, health care, rent or mortgages. And local factories that incorporate foreign components in their products would have to raise prices or absorb the difference.

Lowering tariffs, on the other hand, would actually help. According to the U.S. International Trade Commission, if all U.S. trade barriers had been eliminated in 1999, more jobs would be gained than lost—a number representing only one one-hundreth of 1 percent of the labor force. Plus, total output would have increased by $60 billion.

New technologies and innovation, which have significantly boosted productivity, are primarily responsible for the loss of manufacturing jobs—not trade. As a result, fewer workers can produce much more than ever before. Surprising to many, manufacturing production has rapidly increased, not decreased, over the last 50 years, according to the Federal Reserve.

Consider this: would we have wanted to stop rising productivity in the U.S. agricultural industry that caused the number of farm jobs to fall from 9.5 million in 1940 to 2.2 million today? Would we want to go back and save buggy maker jobs at the expense of auto workers, dump ATMs because they eliminated bank teller positions or destroy voice mail because it replaced receptionists?

Since 1970, the U.S. economy produced 60 million net new jobs. And from 2002 through 2012, the Labor Department projects a net increase of another 21.3 million, with 96 percent in the service sector. Surprising to many, average hourly earnings for service production workers have already caught up to those in manufacturing, according to the Bureau of Labor Statistics.

In his December 2004 op-ed entitled, What Would John Wayne Do?, Jack Davis applies John Wayne-era solutions to today's challenges. This is part of the problem.

Today, technological advances, the fall of Communism and globalization are shaping a new world. In response, we can elect representatives who recognize this and take actions to improve the region's competitiveness or chose policymakers who hope the world of John Wayne returns.

Trade is not the cause of our economic ills. It's one of the few bright spots on our economic horizon.

This article appeared in Business First, February 18, 2005.
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John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author and an international columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.




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