The Trade Deficit Threatens Our Way of Life

tradedeficit

Trade Deficit: The means through which foreign countries are able to amass the funds to buy out American companies and industries. When our country buys more from other countries than it sells to those countries, these foreign countries accumulate our dollars. That money must eventually return to the U.S. and be exchanged for something of value. Since we are producing less and less, the trillions of dollars will come back, not to buy our goods, but to buy our assets and wealth-producing companies, as they are the only thing of value we have left. This has resulted in many of our core industries being controlled and managed for the benefit of foreign companies and countries.

These funds held by foreign governments have given them leverage over our decisions, giving them the unprecedented ability to influence the policies of our country. In fact, this imbalance places us in a disadvantageous position in all our negotiations abroad. Witness our inability to offset China’s currency manipulation that is making it nearly impossible for American exporters to compete.

What is responsible for the rash of imports that has put us in this position? Policy decisions including the WTO, NAFTA, CAFTA, and other one-way “free trade” agreements have eliminated laws regulating or taxing what other countries can ship into this country.

We have laws that protect the United States against the influence of monopolies, but these foreign countries now have a monopoly on all real production. They control the market for cheap labor, and we are forced to buy their goods because we cannot compete. Our government has refused to protect us against this massive foreign monopoly.

Companies now produce goods at ultra-low wages in protected home markets in countries that have government subsidies and do not have environmental or labor laws like we do. These goods, produced by workers who toil for wages like $3 per hour, are imported and sold in the U.S., which has a much higher wage rate. Eventually, the producers in the United States are robbed of their profits and their incentive to continue manufacturing here. They must either produce in other countries like their competitors or go out of business. There is nothing these domestic producers can do to be competitive enough on their own.

Long ago, America operated with measures to protect our manufacturers from competing lower-wage countries. As a nation, we decided it was critically important to make sure we protected our ability to produce what we consumed, what we needed to defend ourselves, and the means to employ ourselves.

As times changed, other countries lobbied hard for the U.S. to reduce this protection and lured us in with their cheap goods. Now that we have taken the bait and in fact lost our ability to produce what we consume, we find ourselves in a precarious position, with little left to allow us to generate our own wealth. Yet we continue to enter into more of these trade agreements with outrageous acclaim.

The U.S. is incredibly vulnerable. We no longer produce what we need for everyday consumption. Between our government debt and consumer debt, we are borrowing $2.8 billion more each day from other countries. And this is just for what we consider normal living conditions.

If we were to engage in a major military conflict, how would we supply our defenses? What would happen to our delicate balance if these other countries decided to reduce or stop lending us money? What would happen if another major shock like 9/11 occurred in our economy (or not if but when…)?

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One Response to The Trade Deficit Threatens Our Way of Life

  1. BIGuru says:

    It took Five years and a lot of beat up to get here…from my thinking in trade deficit…So, when can we do the solution of Advanced Industrial Ecosystems? In another Ten years?

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