How the Trade Deficit Kills Jobs
While many politicians are now blaming the lack of jobs on the federal budget deficit, America’s trade deficit is actually to blame for many of our problems. The U.S. is still millions of jobs behind where it was when the Great Recession started, and the country now has less people employed than it did in 2001. The economy has been unable to create jobs due to America’s massive trade deficit caused by failed economic policy.
Since 1975, the U.S. has imported more goods than it has exported. In 2010 alone, the U.S. had a deficit of $478 billion in global trade. A large portion of this is oil imports, but consumer goods are another area where the U.S. imports virtually everything.
Trade policy that encourages businesses to relocate production of goods to other nations without penalizing them for selling those goods back to this nation has resulted in millions of lost jobs. White House estimates show that for every $1 billion in goods exported, the economy creates 5,000 jobs. Unfortunately, that street goes both ways—data from the Economic Policy Institute shows that for every $1 billion in goods imported, the economy LOSES 9,000 jobs.
While President Obama’s plan to double exports in the next few years is a good idea, reducing foreign imports is even more critical. Making it possible for American businesses to sell products to the American people would open up a market long denied to them. This would help create American jobs and help protect our national security–the decline of American manufacturing has forced the military to increasingly rely on foreign suppliers.
“Free” trade has not been “free” at all, but has cost America millions of jobs. More than three decades of its implementation and colossal failures such as NAFTA have proven that in practice it does not work. America needs to work to implement revised trade policy that will reduce our trade deficits and create jobs.