Six key general policy failures that have contributed to our current economic destabilization:

1. One-way free trade (NAFTA, CAFTA, WTO, GATT)
Our “free trade” policies have allowed other countries to use unfair tactics to put our industries out of business. Theoretically these nations are committed to opening their markets to our goods – but they are not foolish enough to allow that to happen in an uncontrolled way. Via the value-added tax the countries with whom we signed free trade agreements are essentially replacing old tariffs with backdoor protectionism.

2. Failure to Shield Our Key Industries from Foreign Takeovers
Virtually all of our industries are available for sale to the highest bidder, even if that bidder resides in a country like China with a long history of cheating us in commercial competition. We have made almost no effort to restrain other countries from purchasing or bankrupting our industries. The Committee on Foreign Investment in the United States (CFIUS) has been directed to review the foreign acquisitions of U.S. companies and determine if they go against U.S. interests. If so, CFIUS has been directed to stop the takeover and order divestment. CFIUS has only done this once since enacted in 1975.

3. Insourcing
Insourcing refers to the production of goods and services in the United States by foreign corporations. For decades our state governments have sent trade missions to other countries and developed massive incentive packages to compete with other states in luring foreign industry. With tax breaks, training assistance, and other goodies that we don’t extend to our own companies, we invite predatory foreign competition to destroy our own domestic industries. Insourcing provides very few jobs in relation to output and most of those jobs are low-skill, low-productivity jobs in final assembly. We don’t even get any benefit from these companies’ profits because the bookkeeping is rigged to minimize the amount of paid taxes on such profits.

4. Offshoring/Outsourcing
Our markets are structured to make it almost impossible for any manager or entrepreneur, no matter how patriotic, to resist the trend to cut American industrial jobs and ship the work abroad. Thus, although our corporations have laid-off millions of American workers in recent years as part of their outsourcing policy, we should not be too harsh in criticizing them. The real blame lies elsewhere – with corrupt politicians, ivory-tower economists, smug and superficial media commentators, bought-and-paid-for think-tank analysts, and, of course, unscrupulous foreign trade lobbyists. Individual American corporations must do what they can to survive. Once their competitors start moving jobs offshore they have little choice but to follow suit. Jobs they feel compelled to send offshore include even the high skilled ones in engineering, research, and design. Very often we lose not only jobs, but also vital proprietary knowhow. In fact in many cases foreign governments insist that in return for getting the benefit of cheap local labor, American companies should transfer key technologies. China engages in this activity almost as if it were mandatory.

5. Massive debts
This country is running massive debts with foreign creditors. Cheap foreign credit has made it far too easy for us to overextend ourselves. These loans have virtually eliminated any current feeling of discomfort for most consumers. As Americans pay back their debts, the principal and interest goes right into the hands of foreigners and out of America. If the funds do return, they return in the form of more credit or low-skilled jobs, which is in turn used to buy and make foreign-made products. This cycle must end.

6. Loss of leverage
The combined effect of all of our policy failures is a downward spiral. Foreign credit is like an addictive drug and we have become dangerously dependent. We have lost the leverage to counter foreign interests. We must tamely submit to their unreasonable demands and just pretend not to notice when they fail to honor their promises. Even worse, most of us are in the dark regarding the scale of what is happening. This is in part because our media is increasingly engaged in self-censorship for fear of offending powerful foreign advertisers.

How We Will Be Impacted
When we have no more assets to sell, our dollar will be consigned to the ashcan of history. The resulting collapse in our foreign purchasing power will lead to massive inflation, declining real wages, and a shrinking tax base. This will in turn lead to fewer social services, increased poverty, rising social strife, and major national security concerns.

Other nations clearly don’t want the dollar to implode any time soon. In fact we know from their currency market behavior that they are working hard to prop the dollar up. They seem to be choosing a “slow-death” approach whereby we become accustomed to ever-higher levels of dependence on foreign producers and lenders. Foreign countries are providing us with the illusion of stability and security, but in reality we are mere slaves of consumption.

For the most part foreign interests have been very careful to avoid taking action that would prove too politically sensitive. Thus in recent years Japan, for instance, has backed off from making high-profile acquisitions of American corporations. The most obvious instance of this “self-control” is in the auto industry.

At recent market prices, the Japanese could easily purchase any company for pennies on the dollar. The cash needed to buy an American company would be just 1 percent or less of Japan’s official holdings of U.S. Treasury bonds.

Key Solutions
Drastic action is needed to restore our economic and financial independence and we must begin immediately to rebuild our industries. The first essential is that our government should ensure that it is once again profitable to produce most goods and services in American factories employing American workers.

We must establish policies that prevent other countries from doing to us what they would never let us do to them. Specifically, we must halt the sale of key assets to foreigners. We must also close up opportunities for foreign corporations to compete unfairly against our home industries. We should move immediately to curb our out-of-control spending on unnecessary programs and initiatives that are being financed by foreign debt. We should institute policies to cut back our consumption, and particularly consumption of imported products. We need to peg our interest rates to the rate of domestic savings, thereby naturally increasing the incentive to save and reduce consumption. We should not allow individuals and companies to profit by selling out America.

Alongside this change in policy, America must undo the devastating backdoor, one-sided “free” trade agreements that have allowed other countries to block our exports under the guise of free trade. To accomplish this, America must temporarily secede from the World Trade Organization. It is through the WTO that these free trade agreements are enforced. By the terms outlined in the WTO charter itself, a country is legally permitted to take a hiatus from the World Trade Organization during times of extreme trade imbalance; now is that time for America.

No plan to revive our economic and industrial self-sufficiency will be pain-free. Because our industrial decline has already gone so far – it has been proceeding rapidly for more than 30 years already – restoring our industry to world-leading standards of competitiveness will require serious restrictions on trade and investment flows. America needs to be able to produce and save on its own before relying on foreign countries.

Despite indisputable evidence that current policies have proved grossly inadequate or even counterproductive in the past, our opinion leaders remain committed to a business-as-usual strategy that is doomed to failure.

The impetus for new policies must come directly from the broad American public. Without direct and immediate action, there will soon be little left to save.

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