Tuesday, April 17, 2012



One intertwined, inter-related problem,

consisting of two phenomena:

extremely high unemployment, and extremely high government deficits,

easily solved by one brief statement issued by one or both of the presidential candidates.

The tragedy is that this brief statement is not forthcoming.  Therefore tens of millions of unemployed Americans continue to suffer, and the nation continues downhill, its wealth hemorrhaging out to foreign countries.

All this suffering is completely unnecessary.  The continuing destruction of the nation is completely unnecessary.

Turn our nation around

Recently, several people each won over $200 million in a lottery.  It is a proven fact that a good media campaign can change minds on any subject.  With only 2.5% of that prize, $5 million, I could run an informational media campaign that would turn this nation around and get us started on a new beginning for America.

We need one or both of the presidential candidates, and/or one or more well-known and respected public figures in any field of endeavor, to make the following statement:

"America will allow, in a year, free import of manufactured goods from country X, only up to the value of manufactured goods country X purchased from us in the previous year, beginning stepwise in 2012 to full implementation in 2014."

"This principle will apply to every foreign country or entity we deal with.  America hereby abrogates and withdraws from any World Trade Organization agreements, and any other trade treaties, that would prevent the above."

Example:  We currently purchase four times more manufactured goods from China, in comparison with China's purchases of manufactured goods from us. This situation has to be moved stepwise to purchase of manufactured goods from China only up to a total value approximately equal to the total value of China's purchases from us.

American leadership

America adopting the principle described above would be monumental news around the world.  Other western countries, Canada, Australia, UK, EU, suffering the same problems we are suffering, huge unemployment and huge deficits, would take heart and adopt the same principle.

Interesting that "China" contains the same letters as "chain".  Western countries would break the chains and get free of slavery to China and other low-wage countries.

Manufactured goods trade deficits

We are in a manufactured goods trade deficit situation with every country or group of countries we deal with: European Union, Mexico, China, ASEAN countries.   This state of affairs cannot continue.

Many people say to me that we have to innovate and develop new products, to turn our economy around.  I agree!  Let's do it!  But this approach will take a long time to yield results, and will only solve a small part of our unemployment problem.

So in addition we have to increase/resume domestic manufacturing of thousands of existing consumer, commercial, and industrial items.

I recently needed small "binder clips" to organize and keep together some of my paperwork.  I went to my local office supply store.  Yes, clips are available.  A little clear cylindrical package containing 60 clips.  But, "Made-in-China" of course.

America is a huge market of over 312 million people.  For this huge market we can make these clips here in America and sell them in stores at the same price as currently charged for Made-in-China clips.

Multiply this situation by the thousands of simple, easily-made items, and you solve the unemployment problem and the deficit problem.

Who is preventing action?

The presidential candidates, thousands of other politicians (with a few exceptions), and thousands of commentators, analysts, and newsletter publishers, are spending their time on trivial issues, rather than dealing with jobs and the economy.  Even when these people get to the issue of jobs and the economy, they purposely talk nonsense because they want to obfuscate and confuse the issue.

Why do they do this?  Why do they want to allow the wrecking of America to continue?

It is because an American elite is making money in the present situation.  These people have allegiance to China and other foreign countries, rather than allegiance to America.   These tens of thousands of prosperous people are preventing tens of millions of ordinary Americans from having employment and thereby also enjoying prosperity.

A very tragic situation.  Especially tragic because so unnecessary.

Footnote:  Many people say we should cut or eliminate corporate tax for companies that manufacture in America.  Good idea but would require detailed analysis of each product to determine what is the proportion of American labor and American parts.  Then it really gets complicated if and when companies scheme to abuse the system.  The limit proposed above, on the total value of imported items from each foreign country, controls these issues in a much simpler way.  In a related issue, I have long suspected that published figures for imports from China and other foreign countries understate the actual situation.  For example, American companies owning factories in China and other foreign countries may be able to bring their manufactured products into America privately.  Any procedures along these lines would have to be brought under the control of the principle I am proposing here.    


Reader @larry_author comments that there could be a problem with the proposal presented herein.  The problem would be how to assign priority, within the quota, for import of critical parts or supplies for domestic auto manufacturing, as an example.  Reader also comments that the solution to the  jobs/deficit problem is to stop destroying the middle class.

Ed Farkas response:

I see a bigger difficulty with my proposal, but within this issue I can offer at least one response to the reader's comment.  Taking China as one example, my proposal says to China that our imports of manufactured goods from China will drop to 25% of the current level!  (Currently we import four times more than we export to China.)  China's fury at this proposal will have no bounds.  Who knows what they would do.  Maybe they would assassinate any American leaders pushing this proposal.  Within this situation, I am sure China would be in no mood to negotiate what critically-needed goods would be included in the quota, with other items deleted from the quota.

Throughout history, many nations have experienced shortages because they could not import, due to wars or other reasons.  Usually they have found alternate sources or alternate materials or otherwise used initiative and resourcefulness to solve the problem.  America is premier in the world in terms of initiative and resourcefulness.  I am sure the problem posed by the reader could be solved in this way.

But in any case we do not want to be dependent on China or other foreign country for critical items.  That is why it is so insane that our Defense Department places orders overseas.

In response to the comment from the reader that the solution to the jobs & deficit problem is to stop destroying the middle class:  Sending of manufacturing jobs overseas began in the early 1960s, and has continued for 50 years.  This process is what is destroying the middle class.  To stop the destruction of the middle class, we have to greatly increase the size and output of the U.S. manufacturing sector.  My proposal herein is a method of meeting that objective.

I wish we could get a grassroots movement, rather than waiting for government to do something.  If every American would stop buying foreign-made goods, the problem would be solved very quickly.  The big store chains would be forced to go to the thousands of existing domestic manufacturers.  These manufacturers would ramp up, and hire more workers.  Thousands of new factories would spring up, also hiring workers.  Literally, the nation could be turned around in six months.