Sunday, July 17, 2011

Same old lies and omissions

Suppose a friend comes to you and asks you to look at  his car.  His car is not working properly and he wants a report on what is needed to get the car going.

You look at the car and immediately see a small problem with the engine timing.  A competent mechanic could fix it easily.  But you also notice a hole in the gas tank.  Gas is flowing out continuously.

When you make your report to your friend, are you going to mention the engine timing, but OMIT mention of gas flowing freely out of the tank?

Of course not!  How could anyone discuss and analyze the car, without mentioning the leak from the gas tank, and the urgent need to repair the tank?

Yet government officials, politicians, economists, analysts, and commentators constantly talk about the U.S. economy without ever mentioning the huge leak from the gas tank. 

They brightly discuss various alternatives for fixing the economy, or solving the problem of the debt limit, as if the economy was not burdened with a huge millstone around its neck.

That huge millstone, that huge leak from the gas tank, is our negative balance of trade in manufactured goods with all foreign countries.

Our negative balance of trade in manufactured goods with all foreign countries is over 500 billion dollars per year. 

That is real physical money going out of our country, never to be seen again.  That is $1500 for each and every American, real money going out of our pockets, every year. 

500 billion dollars per year is a direct measure of the net amount of additional manufacturing that should be occurring in the USA but is not.  500 billion dollars per year is a huge hemorrhage of life's blood from our economy, a huge leak from our gas tank, a huge millstone around all our necks.

Don't let anyone tell you that the balance of trade figures are theoretical figures that we don't have to worry about.  All you have to do is look at China, rolling in money, not even knowing what to do with all the money, and compare with impoverished America, unable to repair roads, bridges, schools, and shutting down portions of cities. 

Larry Summers was interviewed on CNN with Fareed Zakaria Sunday morning, July 17, 2011.  Larry Summers talked in an upbeat way about continuing our infrastructure work to create employment, putting money in people's pockets, thereby increasing demand and solving all our problems. 

But increased demand means purchase of more foreign-made goods so that more gas leaks out of the gas tank.  More hemorrhage of money out of our country.  Of course this aspect is never mentioned by Larry Summers or politicians or government officials.   (Some politicians do understand this issue, but still too few.)

There is one and only one way to solve our economic problems and that is to increase domestic manufacturing.  Bring the manufacturing jobs back from overseas.  Employed American workers and American factories pay taxes to the U.S. government, thereby reducing the deficit.

Manufacturing in America enriches America through the value-added effect of manufacturing. 

Manufacturing in China or other foreign countries impoverishes America.

Remember, workers in China or other foreign countries don't pay U.S. taxes.  That is the nub our problem.

Larry Summers referred to policies of various countries immediately after the financial crash in August 2008.  He referred to "countries like China and Germany" who, according to Summers, put resources into keeping their economies going.  Summers implied that rather than worrying about deficits we should, in some magic way he didn't specify, follow the same strategy.

The phrase "countries like China and Germany" often appears in interviews on TV and in the writings of analysts and commentators. 

The phrase itself is idiotic.  What other countries are "like China and Germany"?  None!  If a commentator wants to refer to China or Germany, he or she should simply mention China or Germany.
Look at China.  China has money pouring in from every western industrialized country, because all these countries have been so stupid as to allow their manufacturing employment to be sent to China.  After August 2008, the money pouring into China decreased by 30%, but there was still a huge flood of money coming in.

So of course it was easy for China to recover. 

After August 2008, Americans were not able to purchase goods to the same extent as before, so the amount of money going out to foreign countries decreased.  But there was still a huge flood of money going out. 

So of course America has not been able to recover.

Right here it is easy to see the dishonesty, the lie, the omission, in Summers' comments and in similar comments from politicos, bureaucrats, economists, analysts, and commentators.

Here is another absolutely nonsensical lie.  "China will lead the world back to prosperity."  How could this ridiculous statement be correct?  China is bleeding every western country dry.  China has an announced policy of stealing technology from western countries.  Yes, China will become more prosperous, but on the backs of the western countries becoming much less prosperous.  In fact, China's policies are on track toward complete destruction of the American economy, effectively "killing the goose that lays the golden egg".

Now here is another absolute lie that is repeated over and over again. 

"interest charges America owes on the money it has borrowed to live beyond its means"

This phrase is meaningless.  What does it refer to?  Does it refer to the U.S. government borrowing money?  Or does it refer to actions by the ordinary working men and women of America?

Is this phrase an attempt to blame ordinary Americans for a situation in fact created by our government and business "leaders"?

The average American family has not lived beyond a reasonable level of consumption.  The family owns reasonable amounts of goods in terms of refrigerators, cars, clothes, TV sets, computers, cell phones.

The problem is that most of these items were made in foreign factories.  Therefore, through no fault of the ordinary American working man or woman, purchase of the items resulted in money pouring out of our country. 

If all these items had been made in America, using supplies and components made in America, government deficits would be much less because tax revenue would be coming in from employed American workers and operating American factories.  And, money spent on family purchases would stay in the USA and keep working in the USA. 

Simple as that!

Why are Larry Summers, government officials and politicians generally, commentators and analysts, all hiding these simple facts? 

Simple question and simple answer:  because our present economic problems, including 14 million unemployed, are due to the actions of all Presidents and all administrations and all senators and all congressmen, over the last 50 years.  This is the time period in which we started to send, and continued on a larger and larger scale to send, our manufacturing employment to foreign countries.

No malign external forces created our economic problems.  All the problems were created by our own government and business "leaders".  No one is brave enough to face this fact.  So they are trying to cover up.  Maybe China is also exercising influence to maintain the cover-up.  (Many ordinary citizens also find it hard to accept that our "leaders" have messed up so totally.)

A few politicians do understand the importance of getting our manufacturing employment back from overseas, and they are working hard in this direction.  But not enough politicians have yet reached this understanding.  So we are doomed to continue the farce of a national discussion that does not include the real issues.

No comments:

Post a Comment