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Published: Friday, 3/30/2012

Mandel blames Brown for job losses to China

Experts reject claim, cite various factors

BY TOM TROY
BLADE POLITICS WRITER

Ohio Treasurer Josh Mandel has stepped up his attacks on Democratic U.S. Sen. Sherrod Brown in the increasingly heated Ohio race for the U.S. Senate, blaming him for the loss of Ohio jobs to China and other countries.

But Mr. Mandel's attack has faced an angry push-back from the Brown campaign and failed to find any support among China and international trade experts sounded out this week by The Blade.

Mr. Mandel is mounting a strong attack on the first-term senator who was elected in 2006. The state treasurer who was elected in 2010 has raised millions of dollars in his bid to replace Mr. Brown.

A political opinion poll by the Quinnipiac University Polling Institute released Thursday found that Senator Brown leads Mr. Mandel by 46-36 percent.

In a recent criticism, Mr. Mandel blasted Senator Brown as "one of the main [Washington] politicians responsible for Ohio jobs moving overseas to places like China."

The attack outraged the Brown campaign, which says criticism of outsourcing of U.S. jobs to China is Mr. Brown's signature issue.

"They repeat it over and over even though there is absolutely no truth," said Justin Barasky, spokesman for Mr. Brown's re-election campaign. "There is probably no one in Ohio who is working harder to fight the loss of jobs to China than Sherrod Brown."

He cited Mr. Brown's sponsorship of a bill cracking down on currency manipulation by the Chinese, which was supported by Republican U.S. Sen. Rob Portman of Ohio. Mr. Brown has criticized international free-trade agreements and voted against new agreements with Panama, Colombia, and South Korea.

Since launching his attack several weeks ago, Mr. Mandel has offered mostly broad criticisms of Senator Brown for allegedly supporting excessive taxation and regulation and a bloated federal budget that, together, he claimed make America an uncompetitive place to do business.

In a news release on Wednesday, Mr. Mandel said Ohio has lost more than 500,000 jobs and 3,500 factories during Senator Brown's past decade "as a D.C. politician."

"That's a record of failure. Make no mistake, Sherrod Brown is one of the main D.C. politicians responsible for Ohio jobs moving overseas to places like China," according to Mr. Mandel.

Mr. Mandel said his own vision is to advance the free-enterprise system, limit government regulations, lower taxes, and balance the budget, policies that he said would "return America to a place of fiscal conservatism, economic growth, and entrepreneurial fervor."

Mandel spokesman Travis Considine said the campaign will flesh out its critique of Senator Brown's record in the weeks and months ahead.

As one specific, he cited Mr. Brown's support of the 2009 stimulus package, which critics said provided money to a company that was to build wind-turbine parts in China.

Mr. Considine said excessive federal regulations "destroy American jobs and drive businesses overseas," as do an overly complex tax code, a high federal corporate tax rate, and unchecked federal borrowing and spending -- all of which he attributed to policies supported by Senator Brown.

The fact-checking organization PolitiFact Ohio said in an analysis of Mr. Mandel's accusation on March 21 that the wind-farm parts never were purchased, and that overall, Mr. Mandel's claim was "pants-on-fire false."

Several scholars with expertise in international trade, especially in China, said that the exporting of jobs to China and other developing countries is way too complex to blame on anyone.

Mark J. Perry, a scholar for the American Enterprise Institute and a professor of finance and business economics for the University of Michigan-Flint, said, "most of the manufacturing jobs went overseas largely because of the huge differences between U.S. labor costs and wages in China, and really didn't have much to do with any policies."

He said wages in China in 2002 were about 57 cents per hour compared to $15.25 in the United States. The cost savings for doing basic assembly work, such as making clothing, footwear, some electronics, and furniture, in China were so great, that many U.S. manufacturers moved production overseas.

"Now that wages and other inputs in China are rising for materials, land rent, real estate, etc., China's manufacturing cost advantage is shrinking quickly, and production and jobs are starting to move back to the U.S.," Professor Perry said.

"The outsourcing overseas, and now the insourcing/reshoring back to the U.S. has had more to do with labor costs, shipping costs, quality issues, intellectual property issues, and supply-chain concerns, than with any issues of government policies," Mr. Perry said.

In fact, China is a major buyer of Ohio products, according to Baizhu Chen, a professor of finance and economics for the University of Southern California and an ex-president of the Chinese Economists Society.

He told The Blade in an email Thursday that in 2010, Ohio ranked 10th in the nation for exports to China, with a total of $2.3 billion, a growth rate over the previous decade of 686 percent.

He said the top five exports from Ohio to China in 2010 were machinery, $487 million; transportation equipment, $316 million; computers and electronics, $299 million; chemicals, $254 million, and waste and scrap, $212 million.

"The top export performers to China in Ohio in fact are manufacturing. China in fact has contributed significantly to the job creation in Ohio," Mr. Chen said.

Justin Vaughn, a political science professor at Cleveland State University, agreed that Mr. Brown is a liberal Democrat with a record of supporting policies that protect workers and the environment, but he said it would be "silly" to suggest that the United States try to create the same low standards for environmental, worker, and consumer protection that give developing countries their competitive advantage.

"Manufacturing started moving out of Ohio before Sherrod Brown was ever a politician. There's a huge array of factors that are making it possible -- the opening of free markets, improving relations with the Chinese, free-trade agreements around the world that Republicans are very, very favorable to. What Mandel is doing is picking one particular explanation for a phenomenon that has many interlocking, complex explanations," Mr. Vaughn said.

"To have the exact kind of situation in the United States that these corporations are able to have in China, or Vietnam, or Malaysia, or whatever, it would be astounding -- not controlling pollution at all, not protecting workers at all, not worrying about quality of product at all. That's just silly," Mr. Vaughn said.

Stanford Westjohn, a professor of marketing and international business at the University of Toledo, said regulations and tax rates may indeed have an effect on where companies decide to locate in the world. He said a big factor in companies establishing manufacturing operations overseas is a desire to gain a foothold in those burgeoning markets with growth rates of 7 to 9 percent, in contrast to the more modest growth potential in already-developed countries.

"The potential in places like Brazil, China, India, and South Africa is enormous," Mr. Westjohn said.

He said it's fair to criticize policies that are protectionist because he said they benefit the protected country only in the short run.

"If it's a case where a particular [protectionist] agenda is being advanced then, yes, you're forcing a business to take on additional costs that don't improve its competitiveness. I certainly wouldn't go anywhere near making a big sweeping generalization about it," Mr. Westjohn said.

Mr. Considine promised that: "Much of the argument we will be making during the campaign is that Washington is broken and that the policies coming out of Washington are hurting the American economy. Ohio voters will decide if they agree with us in November."

Mr. Barasky said that Mr. Mandel is "lying" about Mr. Brown's record.

"Josh Mandel has to launch wildly inaccurate charges against Sherrod because Josh is wrong on all the major job issues in this state, like the auto rescue, like Governor [John] Kasich's attack on public workers, and he knows it," Mr. Barasky said.

Contact Tom Troy at: tomtroy@theblade.com or 419-724-6058.



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