Tuesday, October 9, 2012

How get the message out?


The value of American exports of manufactured goods is approximately $1.4 trillion per year.  This statistic sounds good and it is good.

But the fly in the ointment is that the value of imports of manufactured goods is approximately $2.0 trillion per year.

Our whole problem of huge unemployment and failing economy is caused by imports not in balance with exports.  Our imports are greater than exports by $0.6 trillion per year, or in other words $600 billion per year.

Can it be as simple as that?

Yes, if we reduce total imports of manufactured goods by 30%, (30% of $2.0 trillion), and increase domestic manufacturing to provide the goods no longer imported, our country and our economy will be on track to recovery.

By eliminating the sending of a net $600 billion to foreign countries every year, we eliminate a huge foreign expenditure, a huge hemorrhage impoverishing our country.  This amount works out to $1900 per year for each and every American man, woman, and child.

$600 billion kept in our country every year, rather than sending it to foreign countries, could put six million Americans back to work on a continuous basis, in terms of wages and manufacturing equipment.  The multiplier effect of manufacturing would put additional Americans back to work.

People would be paying taxes, rather than requiring welfare payments.  Result: reduction in government deficits, something everybody wants.

I am not advocating isolationism.  I am not advocating a firewall around the USA.  I am all in favor of international trade, if it is balanced trade instead of the uncontrolled wild-west trade situation we have now.

Balanced trade means that exports are approximately equal to imports.  Ideally if we export $1.4 trillion worth of manufactured goods per year, then we would allow import of $1.4 trillion worth of manufactured goods per year.

How achieve a 30% cut in total import value?

Again there is a very simple approach.  For each country we trade with, we allow imports of manufactured goods only up to the level of that country's purchases from us in the previous year. This arrangement would be phased in over three years.

In this way we achieve balanced trade with each country, thus achieving balanced trade in our total international trade in manufactured goods.  We no longer suffer a $600 billion per year hemorrhage going out to foreign countries.

Again, my proposal does not involve barring all imports.  My proposal is only to bar imports above the level of our exports.

Doesn't sound all that drastic, does it?

A reviewer has said that my 30% proposal "converts a huge amorphous issue into a simple, understandable, and actionable issue".

If we look at the export/import situation country by country, everything looks straightforward until we get to China.  In 2011, the value of imports of manufactured goods from China was 3.79 times greater than the value of our exports to China.  From this number we see that we would have to eliminate 73.6% of Chinese imports to achieve balanced trade with China.

This large number, 73.6%, is very dramatic and demonstrates the domination of our economy by China.

Any serious consideration of a reduction of 73.6% in Chinese imports into the U.S. would create fury in the Chinese government.  Who knows what they would do in response.  Certainly the first step would be a gigantic additional lobbying effort.

I have learned that six hard-working members of the House of Representatives, led by Representative Brad Sherman of California, in 2011 sponsored bill H.R. 2909, entitled "Emergency China Trade Act".  According to Congressional Research Service Report RL33536, the bill "would terminate China's normal trade relations status and would direct the President to negotiate a new trade agreement with China in order to achieve a balance of trade in four years".

To my knowledge this wonderful bill went into various committees and is still stuck there.

One little problem

Representative Sherman's bill has one problem.   A limit on imports from China into the U.S. could easily be circumvented by transferring production from China to Bangladesh, Vietnam, or other country.  My proposal is better because it places an individual limit on each country we deal with.

Another issue is that we need measures to ensure that statements on manufactured items as to country of origin are truthful.

The good old bottom line

The simple fact is that the only way to get Americans back to work, save the American economy, and save America, is to reduce imports from foreign countries down to approximate equality with our exports.

Yet due to censorship this is the one issue that is not mentioned and is not allowed to be mentioned.  I wish I knew how to break the censorship and get this practical proposal out in the open for all Americans to see and consider!