The following piece was written by K. N. Davis, Jr., former U.S. Assistant Secretary of Commerce.
America’s Leaking Boat, And What to Do About It
Over the years, some of the most telling comments about the U.S. economy have been made by Warren Buffett, “The Oracle of Omaha”. Here are two of his best.
And recently in a CNN interview he said:
Our trade deficits from a massive flow of imports replacing sales by U.S. domestic firms to our own huge market are without doubt America’s worst “leaking boat”. The impact on our own industries has been devastating – in the latest ten years more than 40.000 U.S. manufacturers went out of business and at least 6 million workers lost their well-paying jobs If we continue at that rate, our leaking boat will surely sink! Only about 11% of America’s workers are still employed in manufacturing. That’s where our largest potential number of jobs exists. Under proposed balanced trade legislation an estimated 3 to 4 million jobs can be created there within two years and without deficit spending.
Buffett warned us of trouble coming back as 2003 in a Fortune Magazine article “Our trade deficits are selling America out from under us. We’ve got to stop it now, and here’s how to do it!” He outlined a plan for balanced trade with the rest of the world. It would limit our annual imports each year to no more than our own exports. U.S. production would increase, but we’d still be the world’s biggest importer. We’d keep a fair share of our own market and manage it to prosper and grow for the benefit of all nations. But our leaders in business and government had little interest in any change in our wide open “free trade” policies. Buffett’s plan was ignored as was a proposed bill, “The Balanced Trade Restoration Act Of 2006” by then Senators Dorgan and Feingold”.
Now The latest trade news is that three new U.S. solar technology companies have filed for bankruptcy due to intense competition by Chinese government-subsidized companies, This is added bad news because it belies the idea that new high-tech companies can solve our import problems without changing our trade policies, Not so – those are the very industries that global competitors covet the most, especially China.
Let’s hope President Obama addresses this major problem and opportunity in hisbig speech on jobs this week. We must abandon our leaking trade policy boat and adopt strong balanced trade legislation. It’s a truly big idea whose time has come!