The Trade Deficit And Republican Stupidity

There was an interesting article in the papers Friday about South Korea fining Qualcomm - an American company and the largest maker of cell phone chips in the world - $208 million for competing too effectively in South Korea. Seems Qualcomm was doing such nefarious things as offering rebates to cellphone makers who purchased larger quantities of their product. If like me you think it's weird to punish a manufacturer for incenting their customers to buy more of their stuff, it's important to understand that this is SOP not only in South Korea, but with most of our other trading partners as well. The EU (Europian Union), for example, fines Microsoft and Intel hundreds of millions per year for doing their jobs too well, thus frustrating the development of French - or at the very least Euro - alternatives to their Operating Systems and Microprocessor monopolies. European and South Korean monopolies, meanwhile, are unscathed.

As you might suspect, Qualcomm has a competitor in South Korea named Samsung. Why is this remarkable? Because until recently, Samsung - the largest manufacturer of cell phones in the world - got most of their chips from Qualcomm, and even declared Qualcomm "Best Supplier of the Year" in 2003. Then, Samsung got into the mobile phone chip business, reverse-engineering Qualcomm technology to get their start. Now Samsung produces state of the art 4G chips, and is busily eliminating Qualcomm as a supplier. So, scratch Samsung as a customer for Qualcomm products. Qualcomm's dire situation is not unlike American cell phone manufacturer Motorola, both of whom have been blocked from South Korea's markets, have lost market share, and are at risk of going out of business. Both are also competitors of Samsung.

If this sounds like Mercantilism, it's because it is. Mercantilism, of course, is the practice of a nation imposing laws and trade regulations that explicitly encourage their manufacturing sector and exports while blocking exports from competing nations. As a practice, it stinks to high heavens if you're from a nation that does not practice Mercantilism, because it leaves your manufacturing sector - and eventually your national security - prey to foreigners who wish you harm.

When it comes to mercantilist trade practices, you should know that OffHisMeds starts smelling that stink the minute he reads an article on trade with the words "South Korea" in it. Pound for pound, South Korea is arguably the biggest and most bloated tic on the backside of America, simultaneously blocking most exports from America while exploiting our open trade practices to destroy American manufacturers. Just ask Democrat Congressman John Dingle if he's had any luck in his now generational effort to get the Koreans to buy any automobile parts from the U.S. He's been at it since the early 80s.

Meanwhile, fifty five years after the Korean War, they're still living off our military, 30,000 strong on the Korean peninsula, a bulwark against the starving masses in North Korea lest they manage to scrape together enough carbohydrates to drag themselves to the 38th parallel so as to die by the hundreds of thousands at the tip of American bayonets, from American bullets, or under American bombs. Meanwhile South Koreans will be sipping tea, eating Kimchi and dreaming up their next anti-American boondoggle, "safe in the rear with the gear" as our fighting men like to say of those too chicken - or lazy - to fight.

The fact that most Koreans disrespect our troops is mere salt in the wounds. The fact that America spends some $40 billion yearly (6% of our defense budget) protecting South Korea - much of which is spent in South Korea - is simply more of the same.

Which brings us to Republican stupidity. As mindless free traders, the mantra of my party for two generations has been that Free Trade trumps all, even when your trading partners block your products, subsidize their own, steal your intellectual property and then use it against you to destroy your industries. It's OK for them to let America provide all of their protection, then use the taxes they don't have to spend on defense to perpetuate their trade advantage with the U.S. It's even OK for them to confiscate the profits of American corporations on bogus anti-trust regulation, further lining their pockets at the expense of American industry, American consumers, and ultimately, American taxpayers.

This has been a bi-partisan effort, mind you. Democrats love the status quo because it encourages internationalism, the United Nations and other anti-American institutions devoted to the dilution of American hegemony. And forcing Americans to surrender their wealth so that wealth can be used to destroy America is a logical extension of Democrat policies that encourage Internationalism, most recently expressed by Obama's strategy for Cap and Trade penalties on American corporations, with billions flowing directly into the bank accounts of the world's biggest polluters, including countries like China. China of course, will use that money to further subsidize the cost of exports to America, further destroying our industrial base, and using their dollars to snap up America's stocks, business, property, and what few factories are left.

What sane nation would do these things? What sane nation would so subsidize their own self-destruction? Only one: the United States of America; which brings me back to Stupid Republicans. Unlike Democrats, Republicans are not in thrall to the concept of one world governance as a means to perpetuate their electoral advantage at home, nor do they believe that destroying the dollar will lead to political nirvana, as do Democrats, so it makes no sense for them to encourage policies that lead to our self-destruction.

So why do so many prominent Republicans enable this crap? The simple reason is that none of them - none of them - lives in the real world. This will be a topic OffHisMeds expands on in future posts, but it is irrefutable. Having sung the mantra of "free markets" for so long, all Free Traders have painted themselves into a rhetorical corner which forces them to continue to claim that America benefits as long as markets are open.

Virtually none of them has even contemplated whether or not there is any level of deindustrialization in America that would harm us, nor will they. And yet, America's industrial base has shrunk from over 50% of GDP since the 50's to 10% of GDP today. That means 90% of our economic activity is insurance, government, lawyering, keen financial instruments like Derivatives, Americans selling their houses back and forth to each other and sundry other similar "services". Unfortunately, none of the rest of the world wants these things, which means the trillions of dollars we export in the form of Import purchases come back as investments. This drives up the stock markets, which many brain-dead Republicans look on all too often as an unmitigated good.

Until, of course, a landed gentry of Arab potentates, Russian Mafia and Chinese Warlords own America, with our children as their serfs.

This script has been repeated time and time again. South Korea is not unique in their predatory ways, China is the 6 Trillion pound Mercantilist gorilla, and arguably, even the French and Germans still have a thing or two to teach the world when it comes to ingratitude, opportunism and anti-Americanism. But that doesn't mean we've got to bend over and take it.

Unless of course you're a Free Trader, in which case you probably mistook that cold pressure in your rectal area for, say, another "market correction", and an inevitable consequence of "the business cycle", instead of the world class corn-holing it most surely is.