Oil Dependence and Manufacturing Decline Drive America’s Economic Problems
One of the biggest problems facing the United States is its trade deficit. We simply cannot export enough products to make up for the huge amount of goods we import. Our trade deficit currently sits just under $600 billion per year. Proponents of free trade want us to make up the difference by exporting more services, but services can never account for the fact that we cannot support our own material needs. We continue to import foreign oil at a unfathomable rate. Oil accounts for over 45 percent of our trade deficit. Meanwhile, our manufacturing sector continues to decline. This is an unsustainable pattern, and it cannot be remedied by focusing on services.
America’s petroleum-based economy is unfortunately one that many politicians wish to perpetuate. Republicans are slamming Obama for high gas prices, which they say are a result of restrictions on domestic drilling. Drilling may be a short-term solution, but as long as we are dependent on oil we will be dependent on foreign countries for that oil. America’s untapped oil reserves will never be enough to make us energy independent. That means that we will continue to send money overseas that could instead be kept in the American economy. If we worked to develop new, non-petroleum based energy and technology here in the United States, our economy would see a huge boost.
The key to harnessing the economic potential of that new technology is to build it here. Although America has continued to innovate on many fronts, we have increasingly built our new innovations overseas. This has caused our trade deficit in manufactured goods to exceed $650 billion per year. In the past, America was an innovator in not only new technology but also in manufacturing. We could create items more efficiently than any other country in the world, leading to good wages for workers. These good wages led to strong communities, and America prospered as a whole. Thanks to our free trade agreements, American manufacturing dominance has been undercut by wages that barely exceed slave labor. We need to end our free trade policies so that we can regain our manufacturing sector.
Oil dependence is a short-term solution, and depending on a service economy is short-term thinking as well. As other countries gain wealth from their manufacturing sectors, they will develop their own service sectors. Americans will no longer be needed to provide services. With no market for our services overseas, and no wealth creation here at home from a manufacturing sector, the American economy will crumble. We must remedy these systemic flaws in our economy and make America the world’s strongest economy once again.