Economic Problems Facing the U.S.
The United States is facing economic disaster on a scale few nations have ever experienced. Most people are unaware of the easily observable signs of this crisis, where it came from and how to stop it. While we persist in our superpower mentality, we have quietly become a second-class country in many respects.
We no longer produce what we need to sustain ourselves, we import much more than we export, and we are selling off our assets and taking on massive debts to sustain a standard of living we can no longer afford. Not only was this not the way we became a superpower but it is a sure way to lose this status.
The game plan of our international competitors is to render us completely dependent on foreign production, innovation and financing. In losing domestic self-sufficiency, national security and leverage – our foreign affairs has begun to suffer greatly, and America’s superpower status is coming into question.
We are failing even to acknowledge predatory foreign trade practices undermining U.S. industry. For example, China’s currency manipulation has cost the U.S. millions jobs. Instead we encourage U.S. manufacturers to design, engineer, and produce in third world markets like Mexico and China.
First we should take direct action to reverse our out-of-control trade deficits. While our regulatory and tax systems have unnecessarily raised domestic business costs, the fundamental cause of the present crisis is three decades of extremely detrimental U.S. trade and globalization policies. Under these policies American manufacturers cannot compete with workers in third world countries who often make $4 an hour or less. Due to these failed policies we have had a negative balance of trade of over 10 trillion dollars in the last two decades.
Estimates have shown that for every 1 billion in trade deficit that we have we lose 9000 jobs. With a total of over 10 trillion dollars and growing we have lost over 12 million jobs.
Second, we must carefully manage access to our markets. We should not naively rest on the faith that other countries will hold themselves to our standards in areas such as the environment, labor and competition policy. These standards affect the cost of production. If other countries fail to adhere to these standards, they gain an unfair cost advantage.
Access to our markets must be therefore conditioned on a strategic analysis of our own national needs first and foremost. As things stand, we have handed our sovereign rights to our domestic markets to international bodies like the World Trade Organization and are committed to disastrous “free trade” agreements such as NAFTA, CAFTA, and KORUS . We are in a dramatically different position from emerging low-wage markets.
Our policies should carefully protect our wealth and resources rather than simply provide the lowest consumer cost regardless of the impact on our industries and our workers. By implementing a border consumption tax as part of a competitive tax plan we can ensure American manufacturing is protected and that our nation remains competitive with the rest of the world.
Finally, dramatic new direction is required. Promoting open markets and economic growth abroad will not alone re-balance America’s trade accounts and domestic industrial collapse. Our industries have been so disarmed and dismantled that we now lack the knowledge, capacity and investment capital to facilitate self-sustaining production. We must make sure to invest in our infrastructure and new technologies that make American manufacturing competitive with the rest of the world.