Much has been said about deficit spending wrecking America's economy, but here's the neglected issue that's causing our economy to NEED to be propped up with deficit spending.
For several decades now, several countries have been waging an all-out trade war against the USA. Japan sells millions of cars to Americans each year, but withholds permission for American products to be sold in Japan. "Just fill out this application for permission to import your goods" they say. Years later, they're still "processing" the form.
Their conglomerates make huge profits selling goods in their protected home market, which they use to subsidize exports to America. For example, Mitsubishi appliances sold in Japan subsidize Mitsubishi cars to be sold here at or below cost. They target one American industry after another to be destroyed by subsidized competition.
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And now China has taken the aggression to a whole new level. China does not allow its currency to be traded on open markets like every other major country in the world. China dictates the exchange rate of its currency with the dollar. They keep it artificially low, which keeps the prices of China's products artificially low (as measured in dollars). Coupled with the fact that all labor in China is essentially slave labor, there's no way anyone can compete with their prices.
The USA has laws against: unsafe working conditions, pollution, child labor, sub-minimum wages, theft of intellectual property, etc. Violating those laws is considered cheating. If our government keeps our companies from getting an unfair price advantage by ignoring those laws, why do they let China do it?
The unions are right about this issue. American workers do NOT have a level playing field on which to compete! Any country that cheats by ignoring our standards SHOULD be sanctioned with tariffs! Instead, our tax system is actually a NEGATIVE tariff! Our system taxes American production and lets imports off scot free! We need to abolish all income taxes and enact the Fair Tax. That will tax imported goods just as much as American goods. No more free pass for imports!
Free trade is generally a good thing, but we need to require that the other country practice free trade in return. This might be the only issue where Milton Friedman failed to see what's happening. He said that having a trade deficit is a good deal for us because we get actual goods in exchange for paper money. He failed to notice that the imported goods get consumed, but the selling country gets durable goods added to its industrial base.
Also, money that would have kept Americans employed instead goes to the other country. It returns only as loans, financing further imports. Americans stay unemployed, plus, America gets shackled by ever increasing debt to the other country!
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The multi trillion dollar trade deficit is the REAL fatal wound to our economy! If we would stop letting these other countries bleed us of all our dollars, there would be NO NEED for any deficit spending by our government to keep our economy afloat! Don't worry about China depending on us for their market. In one night, they can put in place a new financial system that would let their own people buy their products.
And don't fall for the argument that trade with China is converting them into a free country. It is not! Trade with China is what gives that repressive government the resources to stay in power! China plans to eventually use those resources to control US as much as they repress their own people! China still plans to hang the west! (All their military literature still says so!)
And they're getting us to give them the rope they'll use to hang us!
China is conquering us the same way the ancient Chinese general Sun Tzu wrote in "The Art of War." The ultimate victory is to manipulate your opponent into becoming your servant without even having to actually go to war! That is exactly what China is doing to us! And both major parties are going right along with it!
Unlike other issues, this is one where solutions are not entirely in the hands of government. There are things we can do ourselves, other than just pressuring the government to stop acting against America's interests. Namely, we can create new products or add new features and functions to existing products, and obtain patents on them. Patents are a tool to help protect against theft of intellectual property. This weapon also helps defend against slave labor, artificially low exchange rates, etc. Obtaining a patent in just the USA and the European Union gives protection in almost half of the world market!
Some people are reluctant to take such actions in a slow economy. They need to realize that several of the world's biggest companies were started during similar hard times. In fact, creating new products and new industries is a major part of what it takes to revive a slow economy! Building new major facilities might be rash in lean times, but doing the advance work like creating new products and obtaining patents is ESSENTIAL in times like these! Those who do the advance work will be ready to go when the economy improves. Their competitors will not be ready. They'll become obsolete and perish.
Business is just like every other part of nature: grow or die! All of life is a competition. All living things compete with one another - even plants and fungi and bacteria! War, including trade war, is a fact of life. We need to compete with every means we have available. And we need to require our government to enforce rules that keep our competitors from having unfair advantage.
Jeff Putman, Engineer, Product Designer Kettering, Ohio More can be seen at: "Top Ten Tips For Economic Development"
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