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Put The U.S. Back To Work! What’s Wrong With Our Strategy?

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Reposted from the Economy In Crisis blog

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Put The U.S. Back To Work! What’s Wrong With Our Strategy?

Kenneth Davis | January 15, 2013 | Economy In Crisis

workDuring the past year a virtual chorus of complaints about our devastated domestic industries  has been raised by proactive economic advisory firms and “think tanks.” How could we let a massive flow of foreign imports take control of our self-sustaining domestic market for goods and services? What’s wrong with our leaders in business and government who allow the U.S. to become the world’s biggest debtor nation with tens of millions of unemployed while we’re well on our way to insolvency?

Well, as the old saying goes, “Before you blame others, take a good look at yourself first!” Most of all, are we in the diverse advocacy community speaking with a unified voice in telling business and government what America needs to be doing differently? The answer is a definite “No!” Some are still firm believers in one-sided, wide-open U.S. “free trade” policies that became popular in the 1970’s at the dawning of the new globalization era.

Strangely a majority of our leading economists are among  the firmest supporters of “free trade.” Most of them are Keynesians who subscribe to the belief that our main problem is insufficient consumer demand that can be fixed by more government stimulus. Yet our big budget deficits put that solution out of reach politically and practically. We’ve got to produce more to earn our way in the world again. We mustn’t feel we can borrow our way out of trouble despite what fine economists like Nobel Winner Paul Krugman may say.

So if action-seekers can agree that our huge trade deficits are our biggest problem for the economy and jobs, will the financial oligarchy of Wall Street, our biggest banks, and U.S. multinational companies join us in restoring our former national policy of total balanced trade with the rest of the world? That  practice served the U.S. well for many years before globalization.  To implement it again now, we’d need strong legislation to cut the annual flow  of imports here  by as much as 25%, while replacing those imports with increased domestic production.  Unfortunately, there’s been no attempt to even explore that very viable solution with top  leaders in business and government. They like things the way they are now, with a strong stock market fed by U.S. business earnings abroad while they disclaim any responsibility for our domestic industry’s ongoing destruction by excessive import competition. What ever happened to patriotism among our leaders?

So, my fellow activists, let’s stop complaining about the failure of others. Let’s adopt our own strong recovery plan for America and convince the “globalist” opposition there’s still time to save our country. Currently the old adage of “divide and conquer” is in control. China is enjoying our divided, self-defeating behavior greatly. We’re becoming a sitting duck for their eventual takeover, yet we haven’t even discussed it much in our daily lives or during the recent presidential election and the ongoing “fiscal cliff” debates.  Where does President Obama stand on our wasted $600 billion in annual trade deficits? Solving that problem would yield $6 trillion in additional income for the crucial next ten-years and add 4% to our annual GDP. It’s high time for all of us who are concerned about America’s future to join in demanding bold leadership now! What is President Obama waiting for?

2 Responses to “Put The U.S. Back To Work! What’s Wrong With Our Strategy?”

  1. Will Wilkin says:

    Thank you Ken Davis Jr. for a great summary of what is wrong and how to fix it. One point after another, you line it up for us.

    I noticed a few years ago the futility of solutions proposed by those you describe as “Keynesians who subscribe to the belief that our main problem is insufficient consumer demand that can be fixed by more government stimulus.” Take, for example, the “stimulus checks” sent to American taxpayers a few years ago. So much of that money was spent on imports because that is what is in the stores. So besides stimulating a few retail clerk jobs, the majority of that money bled out of the country to stimulate foreign manufacturing. The long-term effects of such “stimulus” is to put America further behind and further in debt. Nothing against people of other countries, but it is time American policy benefitted the American people.

    The Keynesians are not all wrong, just very insufficient. No doubt America badly needs public investment in our infrastructure and institutions of education and science and technological development. But the wide open trade policy gives no incentive for corporations to invest in manufacturing and other high value-added industries in the USA, and private sector productivity is the heart of growing GDP and tax base needed to pay for public investments. And so Keynesian solutions come to smell like debt rather than what they would be under a balanced trade policy: essential to building American competitiveness and prosperity for the long run.

    Therefore I very much agree with you that if we want America to grow and prosper, we must “agree that our huge trade deficits are our biggest problem for the economy and jobs…” The chronic huge trade deficits are the leak in our boat, bailed out by debt and transfer of assets, a squandering of the wealth America had built up over many decades under the seemingly-forgotten American System. Our leaders and citizenry seem to have forgotten how essential to our prosperity was the public-private cooperation to grow industrial productivity through strong infrastructure and R&D and science that made America the richest country in the world. That was also how we were able to afford a genuine Social Contract, now under attack as a de-industrialized America faces the inevitable fiscal crises that result from “free trade” offshoring our industries, our jobs, and our GDP and tax base.

    You ask “will the financial oligarchy of Wall Street, our biggest banks, and U.S. multinational companies join us in restoring our former national policy of total balanced trade with the rest of the world?” I think the answer has to be “only if we create the grass roots understanding of the problem that makes it politically impossible for them to continue the policies that have made them fabulously rich precisely through de-industrializing and underinvesting in America.” We need a lot more websites like “Economy In Crisis,” we need our local and our national news media to stop taking their cues from the top and start thinking about the long-term fate of the American people. Wall Street and the stock market seem completely decoupled from the real economy, to the point where their fortunes are the inverse of the country’s fate. Translation: offshoring and financialization of the economy have been very profitable for the multinational corporations that have bought both the Republican and Democratic Parties. You are so right to notice there is no more patriotism at the highest levels of government or business. It has been replaced by greed and cynicism.

    And so I must agree with you that we “need strong legislation to cut the annual flow  of imports here by as much as 25%, while replacing those imports with increased domestic production.” A Balanced Trade law like the 2006 Balanced Trade Restoration Bill S.3899 offered an elegant and guaranteed solution: require imports be licensed through Import Certificates issued in the same amount as our exports. That way we would achieve exactly what you call for: redirection of “our wasted $600 billion in annual trade deficits” into “$6 trillion in additional income for the crucial next ten-years and add 4% to our annual GDP.”

    Who in America would actually be against that? We need to make the public aware of the potential to make America prosperous again, we need journalists to see there is a way out of our decline. If we stop the trade deficit squandering that wealth that was accumulated in past decades, and direct it to American manufacturing and industries, we would indeed have foundation for an American recovery.

    Let’s all work together to spread awareness and hope that we really can save America, this ship doesn’t have to sink.

  2. Tom T says:

    Keynsian tools are there and do help but they will not work if the underlying structural problems and policies are not corrected.

    Increasing debt by the government should weaken the dollar (which is what we need so that foreign goods are more expensive and U.S. goods are cheaper on foreign markets). This might help address the global economic trade imbalances.

    Keynsian spending is one thing but we are so far into the results of these really bad policies that we are monetizing the debt because the normal tools of the government are not enough. The Fed is able to buy U.S. treasuries out of thin air because we have hit up against the limits of reducing interest rates to stimulate the economy.

    Now we have those who have been gaming the system (Walmart) trying to look better in the public’s eye by promising to hire GIs. They have created an economy where a job at Walmart looks better than no job because they buy goods from China’s labor market as our manufacturing was skeletonized.

    Tom T

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