Trade Deficit Key to America’s Next Economy
Complacency and idiocy during the past 30 years have put the economy in dire straits. If the U.S. wishes to be a wealthy country in the next 30 years, trade policy must be re-evaluated to end our trade and budget deficits.
In the U.S. consumption of goods makes up about 70 percent of economic growth. Exports account for a mere 13 percent. However, this is not the case for many of our economic rivals.
According to the World Bank, in Germany exports accounted for nearly 40 percent of GDP, the basic measure of a nation’s economy. In China, the number is almost 30 percent. Those two nations have the largest trade surpluses in the world, and recovered from the ‘Great Recession’ much more quickly because of their export-driven economies.
The production and exportation of manufactured goods are what originally made America an economic powerhouse, and are the same principles that will turn the economy around.
While President Obama’s goal of doubling exports by 2015 is a good idea, we must also work to rein in America’s imports, which have mounted to unsustainable levels. By actually producing the goods we buy domestically, we will support the jobs and communities in this country.
If such plans pass Congress, ideas such as a National Infrastructure Bank, increased funding for trade agencies and investments in innovation are steps in the right direction. Nearly two-thirds of exports originate in American metro centers such as New York, Houston, Los Angeles and Chicago, so strategies that help bring local leaders together to encourage export and job creation will also be essential to success.
Disastrous ‘free’ trade pacts with nations such as South Korea, that are in the mold of previous failed agreements, such as NAFTA, are not the answer to our problems. Embracing realistic and pragmatic solutions to end this nation’s reliance on foreign producers will create jobs and build wealth.