A lot of our current free trade agreements are actually protectionist agreements that help multinational corporations that setup shop in those countries to prosper while small businesses that make most of the manufacturing in the US is left to pay up to a 35% federal corporate income tax plus other high expenses due to state, local and government regulations.

US Multinational companies lobby for these protectionist agreements that they call free trade to confuse people. Protectionist agreements like NAFTA and WTO do not count money printing by foreign central banks to keep exchange rates low, VAT taxes, various non-tariff barriers, and requirements that to export in some countries you have to setup a joint venture with local partners so that your technology can be copied as protectionism.

If multinational corporations want to setup shop overseas they have that option, but laws Congress pass by signing bills they never read should be along the lines of encouraging job creation at home and should not be promoting the exportation of jobs either because of too much spending causing inflation at home, tax breaks for outsourcing and a high tax rate for staying in US.

It would make sense to drop the federal corporate income tax rate to like 5% and impose a VAT tax on imports to rebate US exporters. Remember VAT taxes and such practices like money printing out of thin air to keep your exchange rate low is not considered protectionism it appears by WTO.

Additionally, before there was a personal income tax in the US; the government received most of its revenue from tariffs and taxes on imports. Does it make sense today that we get taxed heavily for working to make a living while foreign goods come in for free from protectionist countries in which these governments have a purposely stated objective to put US industries out of business?

Even worse, a lot of these foreign imports get subsidized by US exporters because in order to export to a lot of countries we have to pay taxes for the priviledge of allowing US exports in which this tax money is then given to the importing country's own exporters. In effect some US exporters are actually funding their own demise. Additionally a lot of countries subsidize their industries by their governments and central banks giving them tax money and newly printed money.

The bottom line, these protectionist agreements special interests call free trade confuses people and the Congress by considering only tarriffs and quotas as protectionism and every other barrier imaginable as free trade as long as its not called tarriffs and quotas. The requirement that in order to export overseas in some countries you have to setup a joint venture with local partners so that they can copy your technology is not considered protectionism it appears by the WTO.

We constantly hear politicians complain that the trade deficit is due to Americans costing too much and that we are not educated enough. Once again just more confusion being thrown out there. Besides Congress not spending much time on trade, over half of Congress has an education in law so they don't probably really understand economics.

The fact is that most bills are never really read so you wonder why we tax heavily producers that want to stay in US but give benefits to those that leave. Does it make sense to tax people heavily to make a living with income taxes when foreign products come in tax free from countries that are protectionist and have the goal from their governments to put out of business US industries?

This mention that trade deficits are related to education and also that Americans cost too much is the peoples fault is a big fallacy. Remember, government controls the value of money with its supply and can influence bank credit expansion so that when they spend and print too much it costs more for everything like labor and land. Besides that when you sign protectionist agreements from WTO and NAFTA that count only tariffs and quotas as protectionism and not things like a competitors undervalued exchange rate due to money printing, VAT taxes, various other non-tariff barriers and requirements from some countries that to export you need to setup shop with local partners so your technology can be copied. Odd that these last barriers mentioned are not considered protectionism. Do they maybe have something do with trade deficits?

We hear the complaint that companies setup shop overseas to get around trade barriers. Hey, I thought most countries are in WTO and abide by free trade rules? Why need to setup shop overseas then? Is it because the other country can keep printing money faster than we do so it will always be cheaper and no matter how many degrees Americans have it will still be cheaper there?

Another fallacy is that wages are cheaper overseas due to American uncompetitiveness. Wages are cheaper overseas due to another country's larger labor supply and having less capital equipment. Even with cheaper wages like a dollar an hour, if a country is buying more from another country then that country's exchange rate with the trade surplus should eventually rise that even though wages still maybe cheap its more expensive based on exchange rates to import from the surplus nation. Of course the adjustment does not happen when currency rates can be manipulated and pegged steady with the simple click of a computer key in today's age.

Politicians blaming that Americans are not educated enough sounds like what happened in Weimer Germany. The government printed money to pay reparations and blamed the rising prices on everything else but their inflationary policies. Once the territories with their industrial base was confisicated, the hyperinflation really hit when all they could do was create money.

America's troubles summarized:

-We have a 35% federal corporate income tax rate on any business revenue over 18.333 million dollars
-Inflation at home caused by Congress, Federal Reserve and Commerical Banks causing prices to rise because of increasing money supply causing complaint from business that Americans cost too much. Complaints of American labor costing too much leads to more calls for open borders and more types of visas for foreign workers. Its never inflation caused by increasing money supply or Congress spending too much by signing bills they don't read as the cause of rising prices according to Congress.
-Protectionsim from countries that keep their exchange rate undervalued by printing money. No matter how productive and innovative a country is, by a competitor country undervaluing their exchange rate, it will always be cheaper to produce in that country. So every US citizen can have 5 degrees each and still won't be competitive.
-Too much focus by Congress on education as the problem to trade deficits and not inflation of money supply and protectionist trade agreeements from NAFTA, WTO and bilateral agreeements.
-Protectionism where we compete with exporters whose Government and Central Banks give aid and new money to their exporters so that they can remain competitve.
-Protectionism where to export in some countries you have to setup a joint venture with local partners so that they can copy the technology.
-Protectionist VAT taxes where US exporters have to pay foreign governments tax for them to accept are exports which causes prices of US goods overseas to rise. If weren't bad enough, foreign governments transfer the tax money to their exporters which in effect US exporters are causing their own demise by subsidizing their competition.
-Protectionist policies of WTO and NAFTA that don't count VAT taxes, various non-tariff barriers, and undervalued currencies as protectionism.
-US Congress that signs too many bills for new regulations not read, laws that impose high taxes on investment, encourages consumption, and spends to much leading to futher inflation.
-Giving tax breaks to outsource instead of reducing corporate income taxes and imposing VAT taxes on imports that can be rebated to US exporters like other countries. Remember for example VAT taxes not considered protectionism according to NAFTA and WTO policies.
-Over half of Congress has an education in law and doesn't probably understand economics. The ones that are educated in economics have a Keynesian view that increasing the money supply and stimulating consumption is the cure all. Most do not understand Austrian economics and how a free market works before interventionist policies.
-Fallacy that GDP contains data for most economic activity leads to push for constant consumption. GDP only contains data on consumption of final goods by individuals, businesses, and government. It excludes all the intermediate stages of business spending like for example on machines to make machines to make lasers for the medical industry. If data on total economic activity was compiled it would show final consumption to be like 40% of economic activity. A higher savings rate would mean less spending in industries that make final consumption but possibly more in the intermediate stages. So savings doesn't decrease total economic activity just in the consumption sector. Less consumption means there should be less price pressure on raw materials so that time could be taken to research technolgy for future production without constant price competition for raw materials from consumption industries.
-Fallacy that trade deficit can be fixed by weakening dollar when there are market access issues. The dollar can be weakened all it wants and if protectionist measure against US are still applied like VAT taxes and others, then not many more US products will enter that market. Its important to note that the US dollar has been depreciating steadily since the 1970s and trade deficits have gotten worse because of currency pegs, VAT taxes, protectionist WTO, NAFTA agreements and non-tariff barriers like to export in some countries you have to setup factories with local partners so that the technology can be copied.
-Fallacy that wages are cheaper in other countries because of American uncompetitiveness. Wages are cheaper in other countries because of larger labor supply and less capital in some instances. Even with cheap wages, if a country is running a large trade deficit, the country with a trade surplus should have a currency appreciating steadily where even though wages may still be cheap, based on exchange rates it should be extremely more expensive to import from.
-Fallacy that all insourcing is good. Some insourcing is good if high technology is brought to US and provides US workers with new skills. Unfortunately most insourcing is for assembly manufacturing where most of the high tech manufacturing goes on overseas. Additionally companies that insource use transfer pricing techniques where they mark the price they pay for goods from parent company units higher to avoid paying taxes Furthermore insourcing companies use profits earned from their protected home markets to expand in US and sell sometimes products below cost to put American companies out of business. Even more, many local and state governments offer huge subsidies for foreign producers to setup shop in US where local US producers have to pay up to a 35% federal corporate income tax and various state and local taxes. Lastly any knowledge and patents gained from experimenting with production processes in the US at these foreign owned plants goes to the foreign companies.

Solutions:

If US companies want to setup operations overseas that's their choice. However companies that want to stay in US should not be penalized. What should be done in the mean time is to encourage job creation and investment at home. Corporate Income taxes should be lowered considerably maybe even to 5% to bring as many jobs as possible back or to be created. Permanent credits to stimulate production like R&D and not taxes on production are needed. If taxes need to be imposed then consumption should be taxed like enacting a VAT tax on imports. It doesn't make sense to tax income from making a living high when foreign goods from protectionist countries come in for free. Furthermore, protectionism is more than just tarriffs and quotas, there are many other barriers to be included in NAFTA and WTO definitions. If these agreements are not amended to include other barriers then each country should decide their own course of action with trade. Trade is either entirely free or it's not at all.