Up is down. Black is white. Night is Day. Communists are capitalists.

Posted By Daniel W. Drezner Monday, February 16, 2009 - 4:22 AM Share

A prominent institution issued the following warning about the "Buy American" provisions in the stimulus package:

History and economic theory show that in facing a financial crisis, trade protectionism is not a way out, but rather could become just the poison that worsens global economic hardships.

Name that institution:

Click here for the answer.

Admittedly, the title of this post gives the game away, but it nicely highlights one of the many oddities of the current crisis.

EXPLORE:ECONOMICS, CHINA, FINANCIAL MELTDOWN, FISCAL POLICY, PROTECTIONISM

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KYLE L

6:53 PM ET

February 16, 2009

debating 'buy american'

Dan- Any chance you could blog about whatever 'buy american' provisions ended up in the final conference bill? I keep hearing conflicting reports that the really protectionist stuff has/hasn't been removed, and that the bill Obama will sign tomorrow does/doesn't still have stuff in it that free traders should worry about. Your thoughts would be appreciated!

DANIEL W. DREZNER

1:32 PM ET

February 17, 2009

Assignment desk

I'll get on it.

SAVE_THE_RUSTBELT

7:56 PM ET

February 16, 2009

trade

Not to worry, whatever weak provisions came through in the bill will not be enforced anyway.

Obama is naming an auto task force instead of an auto czar, because he is going to need some political cover when he double crosses the UAW (the membership busted their butts to get him elected).

Obama hopes the voters in Ohio and Michigan take their beating but forget it by 2012.

DON S

7:02 PM ET

February 17, 2009

Double-crossing in the eye of the beholder....

'save_the_rustbelt', the economic model at the Big Three isn't working for several reasons:

1) Bad products
2) Wages too high
3) Healthcare and retirement costs

The first the federal government cannot address, although better products may be in the pipeline, so there is hope.

Wages are too high, and need to come down at least to the level of those offered by the foreign transplants in Ohio and the South. Those are still pretty good wages, still among the best manufacturing wages in the country. But you can't expect the nation's hash-flippers to save the bacon of their betters (except the divine bankers, natch).

The third is where the Feds may be able to come in, but again it's not fair to ask the uninsured poor working types to guarantee the UAW's incredible health plan (they are too busy succoring the bankers and financing $100 million management irridium parachutes) to do that.

But there is little point in salvaging the UAW health plan if it's not part of a comprehensive solution to put Detroit on a paying basis sometime in the next 5 or 10 years. Which is why (as you put it so eloquently) the UAW is gonna get 'screwed'. What 'screwed' really means in this context is that Obama can't make manna fall from the skies and make it all better for the UAW. He has to do it for the whole country! And if I have to take a haircut (and I am, I am), so must the UAW.

TESS

10:29 PM ET

February 17, 2009

Don S....

With comment number 1 & 2, I agree with a partial disclaimer that wage comparisons also need simultaneous cost of living comparisons. There can be great variance of wages within one field based on cost of living.

The last is not anything that the car companies have not been talking about since prior to 2001. Sadly, health care cost is not just an automotive issues; it is a domestic issue. The solution, so far, has been forcing pay cuts by transferring health care costs to workers that are not protected by union contracts.

My personal opinion is lets not blame the bearers of bad news. The UAW can be faulted for alot, inflated wages, or the weird rules that stop work because only an electrician can make a certain change, that leaves the electrical engineer sitting 5 hours waiting for the electricians schedule to clear to change a part on a product the engineer himself designed.

The health care issue, however, is not the fault of the UAW, IMHO. It, in this case, was doing its job and assuring the rights of workers in an unwieldy and unforgiving system. The very reasons for having unions is to assure rights. Our health care system is a mess and very unwieldy. First, too many hands are in the system, needing to show a profit. You have the caregivers and institutions themselves along with the medicine manufacturers and pharmacists. Then the malpractice type insurers at all levels that have a take and need to show profits. Then the people that the hospitals have to hire to make sure they are not sued and are in legal compliance, from lawyers to special paperwork nurses. Lets not forget the health insurers themselves, ect..... Of course, some of this is necessary, given the functioning of a totally separate out of control system, our legal system. (The New York Times ran a series of Comparative articles that was most enlightening last year, especially on our huge wrongful damage awards that often stretch well beyond mere compensation for injury.) I don't blame the UAW for the healthcare cost issue, or for assuring good healthcare. The fact is, health care can easily cost more yearly than the average American income, even if you are insured, so it was their job to secure this.

I agree, however, that their fault or not, they are simply not a powerful enough lobby to make any needed impact and will have to eat cake with the rest of us.

DON S

2:54 PM ET

February 18, 2009

What is deflation?

Tess, I hear you. But the fact is that the UAW doesn't live in it's own world, it lives in a society in which the mean wage has been declining for several years.

Deflation is a general problem which has been applied to the bulk of the US workforce and is a major cause of the current downturn. Obama can selectively repeal the laws of economics for the UAW membership, which has been a privileged class which has not seen it's wages fall (much) and have not been forced to go without insurance. But he can't do it without perpetrating a huge injustice on most everyone else.

I agree that the UAW is possibly the model we ought to be aiming for in terms of workers rights, but remember that most of us have not done that well. Asking us to bail out Wall Street is bad enough, but understandable perhaps given that we need a functioning banking system as a safe place to stow our belated savings at very least. In the longer term we also need social justice. Not only social justice for I-bankers and UAW members, but social justice for everyone. Carving out pockets of social justice and leaving everyone else with social injustice isn't going to work, and Obama is smart enough to know that.

PCDE

8:16 PM ET

February 16, 2009

protectionism verboten

How's Globalized Free Trade been treating us?

BLUE13326

9:31 PM ET

February 16, 2009

Yeah, I'm not clear either on

Yeah, I'm not clear either on what actually passed regarding this.

And if China is really worried about this, they could actually open up their own domestic market to us, start enforcing intellectual property laws, and stop manipulating their currency.

And Russia? They've been busy passing protectionist laws, so let's not bother bringing them into this.

TOMMC

10:33 PM ET

February 18, 2009

Bunk

Globalization: Instead of sacrificing American soldiers in an idiotic attmept to improve the circumstances of Iraq and Israel this is a nefarious attempt by left-wing and neo-con policy makers to sacrifices the lives of American workers to improves the circumstances of China and India. Globalization has been pure bunk from the get go.