Winning The Other War For America!
President Obama often refers to himself as a “war-time president” when talking about the sad, ugly war in Afghanistan and his efforts to end it successfully. That’s fine, but what about our other much bigger war? That’s the “non-shooting” trade war for domination of America’s market – the world’s biggest and richest. We’re losing that conflict badly, and have been for many years, yet its destructive impact on our economy, jobs, and our ruinous trade deficit is never even mentioned by the president. Instead, he chooses to speak out on more personal issues like gay marriage that don’t require his own involvement while he’s so busy seeking reelection. This telling choice of priorities may hurt him with many voters!
What are the facts?
First, ever since the dawn of globalization in the mid-1970s we’ve had wide-open “free trade” policies here at the urging of Wall Street, our biggest banks, and our multinational companies. We abandoned our former practice of keeping a small annual trade surplus with the rest of the world. “Don’t worry,” economists said “we’ll float the dollar, and the adjustment process will vary the dollar’s value to keep us competitive!” Not so, it turned out, especially when China pegged its currency to always keep the dollar’s value high for them and other exporters. Still, our wealthy 1 percent investor class has done very well, while the 99 percent working class of Americans have been hurt badly by job losses and diminished savings.
Next, the number of exporters aiming at the U.S. market has increased dramatically. PIERS, the trade data firm, reports that there are a half-million exporters around the world now serving our market. Why not, when it’s so big and is wide open with few trade restrictions? For 2011, our total imports were $2.3 trillion, far more than any other country including China. Our exports were only $1.5 trillion. Even taking oil imports of $300 billion off the import total, there’s $500 billion more goods we’re buying than selling abroad. The total of those trade deficits was $6+ trillion for the latest decade! Massive import flows are taking over our market and destroying our industries, with even our ability to supply our armed forces dangerously impacted.
What can we do to win this trade war?
As always, there are near-term and long-term ideas for rebuilding our competitiveness. For the long term, renegotiating failed free trade agreements like NAFTA will help. It’s hard to believe that Mr. Obama now has given his okay for negotiating “TPP,” the Trans Pacific Partnership free trade agreement, that may be worse than NAFTA. Killing
that program would be a good start toward winning the trade war. For the near term, the best way to cut the flow of imports requires bold, direct action by Mr. Obama. We only need to cut total annual imports by 25 percent, or $500 billion, to eliminate the current trade deficit. Presidential Executive Orders for brief one-month suspensions of all imports could begin the cuts and get the attention of our trading partners. We’d request their commitments for permanent reductions or impose our own import cuts or tariffs.
Wake up, America! First, we need to hear from our president that he knows we’re losing a big trade war badly and that it’s time for the traditional patriotic response by all Americans whenever we’re attacked. Also, for now, the 1 percent and the 99 percent must set aside their political ideology differences and join Mr. Obama in “winning the other war!”
Mr. Davis was a former U.S. Assistant Secretary of Commerce and also a former IBM Corp. VP and Chief Financial Officer.