I often disagree with Clyde Prestowitz, especially on the benefits from trade, but that may be why his readership is higher than mine. But he got it right in a post he did for Foreign Policy titled “Washington doesn’t sincerely want jobs”. I have been thumping that theme on my tub for quite a while. There are two other reasons I took note of what Prestowitz has to say, because he lauds Singapore’s economic growth programs and he raises the specter of a budgetary assault on America’s ability to export. Here’s part of what he has to say:

A few days ago I was in Singapore meeting with, among others, some old friends from Singapore’s Economic Development Board. This is the government body in charge of promoting exports, attracting foreign investment and technology to Singapore, and of generally planning and executing the city-state’s economic strategy. As always, I was impressed with the comprehensive strategic thinking of these people and of their single-minded pursuit of investment, technology, and jobs that could be brought to or developed in Singapore.

I went from these meetings to have a drink with a senior U.S. Commerce Department official who happened to be in the neighborhood. Now remember that one of the much-publicized Obama administration initiatives of the past couple of years has been the export doubling program of the Commerce Department’s Foreign Commercial Service. The idea was that every $1 billion of exports generates about 15,000 jobs and that doubling exports would therefore generate lots of jobs and drive unemployment down. It was and is a good idea. So you can imagine my surprise when the official explained that, although not yet announced, the Commerce Department is planning to reduce the staff of the Foreign Commercial Service. I guess Obama and his new, inexperienced commerce secretary think the service will do more with less, but the reality is that it will do less with less. And this was the plan before the recent debt ceiling deal. In the wake of that, the likelihood is that the service will get even less and perhaps do nothing.

I can vouch for the thorough, impressive approach of the Singapore Economic Development Board, though I acknowledge they have an easier job of it than Washington does. After all, Singapore is only a city of a little more than five million people, and policy becomes easier in what is essentially a single-party political system. That said, I watched the EDB in action for three years in the Lion City and they have accomplished wonders.

Will the Commercial Service stay here?

What Prestowitz reports about the Foreign Commercial Service is more than disturbing. I have been told the same things about the CS budget that he heard, but had not reported on it because I was told in strict confidence by folks on the inside. The Commercial Service has always been a tiny part of the Commerce Department and I can only recall one year in its forty-year history in which it received strong support and attention from the Office of the Secretary. What I hear is that eleven overseas offices are on the chopping block and that as many as 270 of the local overseas employees may be let go. These local employees are the backbone of the Commercial Service. You may see the American commercial officers (I was one), but it is the local employees that have the local knowledge and expertise, and provide the continuity when an officer moves to the next assignment. They’re good and once let go, we won’t get them back.

That’s not all. The domestic side of the Commercial Service (the US Export Assistance Centers in your local communities) is also under fire. I hear that Commerce has commissioned yet another “resource allocation model” to look at where the Service’s dwindling dollars should be put. That is never good news.

And Prestowitz is right that the debt ceiling “agreement” does not bode well. When Congress returns, it will be open season on small federal programs and I anticipate attempts in the House to “zero out” the Commercial Service. There is no concept that the CS budget is an investment, not an expense. I can’t put it more clearly than one of the comments on Clyde’s post:

Cutting the work of the Foreign Commercial Service is one of the STUPIDIST things our federal government can do. How many times do economists have to tell us that exports create better jobs and bring new money into the domestic economy before politicians and the general public get it through their heads? Maybe we have to have it dumbed down for us in terms of the old business maxim “it takes money to make money”?

I’ve used the services of the Foreign Commercial Service and because of their export advice and help in starting to export I had to hire 20 new people to fill my increased orders. Now my exports exceed my domestic sales.

We can hope the cavalry will charge to the rescue. I had several conversations with a White House staffer earlier this summer about the President’s plan for reorganizing the federal government’s trade functions. (He mentioned it in his last State of the Union message, as part of implementation of his proposal to double U.S. exports.) The draft re-org plan should be on the President’s desk by the time you read this. I have no idea what is in it, or what President Obama will decide to do with it, but I know what I recommended.