-
In previous posts I have discussed what I call fantasy explanations of the very bad economic and jobs situation in good old USA. Fantasy explanations are presented to hide the real cause of the problem, namely that we shot ourselves in the foot by sending, or allowing the sending, of manufacturing jobs overseas.
Now there is a new crop of fantasies along the following lines. America has had its great days on the upswing, and now is going down, similar to "The Rise and Fall of the Roman Empire".
When I see these new fantasies, I don't know whether to laugh or cry, whether to become physically ill, or simply give up the fight against the corrupt authors of these fantasies, and their corrupt employers.
The fall of the Roman empire was due to myriad, complex internal and external developments. The problem in America is due to one simple thing that we did to ourselves, namely sending our manufacturing jobs overseas.
Since the cause of our problem is very simple and identifiable, it is only logical that the SOLUTION to the problem is also simple and identifiable.
All we have to do is cut imports and thereby encourage increased domestic manufacturing.
I presented a very simple, fair, balanced, and do-able proposal in previous posts:
Country by country, allow imports of manufactured goods from each country only to the extent that that country buys manufactured goods from us.
Right now we have a trade deficit in manufactured goods with every foreign country. The trade deficit with China is the largest. Then there is the European Union, Mexico, Japan, the "ASEAN" countries, and others. This is a ridiculous and impossible situation.
We can easily get into a balanced situation with each of these countries or entities, so there would be a ZERO trade deficit with that country or entity. In this way we would eliminate our trade deficit in manufactured goods with all foreign countries of over $500 billion per year. This outflow is a devastating hemorrhage of wealth, a direct cause of the impoverishment of our country.
Our politicians over the last 50 years have been criminally negligent in allowing this impoverishment to come into existence. Today our politicians are hysterically arguing over every irrelevant/trivial issue they can think of, rather than getting down to the business of cutting imports to encourage increased domestic manufacturing.
Polls show that the ordinary working men and women of America understand very well the importance of domestic manufacturing. Polls show that the American people are prepared to pay a bit more for "Made-in-USA" goods but all we see in the stores is "Made-in-China".
Why is it so difficult for a simple and obvious idea, Made in USA, to gain traction? Basically, the reason is corruption in our national government.
There are some politicians who understand, and are speaking out about Made in USA. But the vast majority of politicians PRETEND not to understand. This is where the corruption comes in.
We used to worry about organized crime infiltrating into legitimate business firms. It is possible now that we have a much bigger problem. It may be that China has infiltrated into the US economy in a major way. China may already own or control thousands of U.S. companies. All it takes is own 10% of the shares of a company, and you can get your own man or woman on the board of directors, and thereby influence the policy of that company.
All of these companies have much easier access to government than the ordinary working men and women of America. These companies want to keep the status quo of unlimited import of manufactured goods from China and other countries. This may be the reason why America is not picking up and running with the simple solution of cutting imports to encourage domestic manufacturing.
The situation could be so bad that if we knew the extent of it we would yearn for the good old days of organized crime infiltration!
-
Monday, February 13, 2012
Friday, February 3, 2012
Union State
+
Good Ideas
A gentleman I met on twitter (I have unfortunately misplaced my record of his name) has a great idea. He says we should have a new official day: "Manufacturing Day". The object is to emphasize the importance of manufacturing in America. It would not be a holiday where we don't work. It would be a day where the American manufacturing workforce would be in the normal working mode, enriching America through manufacturing.
Another gentleman (@mitch_goldberg) also has a brilliant idea. He observes that investors are running around the world looking for third world economies that are growing. Example: BRIC. Brazil, Russia, India, China.
America's ordinary working men and women know America has been brought to its knees by the insane 50-year policy of sending our manufacturing jobs away. America is now almost a third world country. Mitch's idea is that investors should look right here in America. It is probably the best place to invest, because, despite the bumbling of most of our "leaders", American manufacturing is slowly recovering. I predict that this recovery will feed on itself and the rate of recovery will increase, making America a very good place to invest.
Another good idea
No one can deny that America is in bad shape. 25 million people unemployed. Foreclosures on millions of homes. Neighborhoods of empty homes deteriorating rapidly. Paved roads allowed to return to gravel. Shuttered factories rusting away. Portions of cities abandoned. Schools and bridges falling apart. All levels of government facing impossible deficits.
It is almost an episode of the TV show After People!
There is only one way to solve the problem: cut imports and increase domestic manufacturing. The wealth needed to have a viable economy and a liveable country comes from manufacturing and manufacturing employment. Many reactionary and stupid commentators and analysts don't accept these plain facts. One thing they do in the face of the above comments is start screaming about free trade and how we don`t dare interfere with free trade.
Free trade is great until it becomes EXPLOITATION. Here is an example of EXPLOITATION in trade:
Trade in manufactured goods between America and China, 2010.
U.S. exports to China. $93 billion
U.S. imports from China. $366 billion
Note the ratio of almost 4 to 1.
Trade deficit with China $273 billion
In contrast, here is the situation that would exist in balanced, reasonable and constructive free trade:
Trade in manufactured goods between America and China, 2010.
U.S. exports to China. $93 billion
U.S. imports from China. $93 billion
Note the ratio of 1 to 1.
Trade deficit with China ZERO
Now here is my good idea, if I say so myself!
On a country by country basis we have to control imports following the above pattern. Let's say country XYZ purchased manufactured goods from America in 2011, valued at $35 billion. We then say to country XYZ that we will allow entry of your manufactured goods into America in 2012, absolutely free of tariffs, duty, tax, etc., up to a limit of $35 billion. Once that amount of imports in 2012 has been reached, no further imports will be allowed.
We do this with each and every country we deal with, in this way eliminating our present devastating hemorrhage of wealth to foreign countries of over $500 billion per year. And in addition giving our domestic manufacturing breathing space to survive and grow.
One commentator has said that it is mathematically impossible for every country to achieve the status of net exporter. He is absolutely correct in saying this. My proposal herein is not that we try to achieve net exporter status. All we are trying to do is have balanced trade with other countries.
If my plan requires abrogation of World Trade Organization treaties and regulations so be it. If China gets furious and starts blustering, so be it. No nation can accept a $500 billion trade deficit hemorrhage year in and year out, into the indefinite future, ultimately leading to the complete destruction of that nation!
State of the Union Address
Now let's look at the State of the Union Address of January 24, 2012.
Here are some excerpts from the Address:
"We should start with our tax code. No company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny (of this new tax revenue) should go toward lowering taxes for companies that choose to stay here and hire here in America."
"If (a manufacturer) wants to relocate to a hard-hit community, (the manufacturer) should get help financing a new plant, equipment, or training for new workers."
"It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America. Send me these tax reforms, and I will sign them right away."
"Expand tax relief to small businesses that are raising wages and creating jobs. So put them in a bill, and get it on my desk this year."
What is wrong?
Superficially, these statements from the State of the Union Address sound good. But there is a huge flaw. What is the flaw? The word "should" appears five times in these brief excerpts.
I am an ordinary private citizen. Out of 312 million people in America, only my loyal twitter followers, 100 or so, know about me and pay any attention to what I am saying. So I have no power to get anything done. When I propose some action, I have to use the word "should".
President Obama is THE PRESIDENT OF THE UNITED STATES OF AMERICA. We have all grown up regarding the president as the most powerful man in America. The president should not be saying "should". The president can get things done! He can say "we will do this" or "we will do that", or "I have ordered this" or "I have ordered that", while little no-account Ed Farkas can only say "should"!
I was an Obama supporter. But Mr. Obama has lost my support, due to his inaction and passivity.
Mr. Obama has been president for three full years and he is only now saying we "should" remove tax provisions that reward companies for moving jobs overseas?
UNNNNNN-BELIEVABLE!
He should have issued an executive order on day ONE of his presidency, suspending those tax provisions, as just one example of desperately needed actions that never happened.
What else is wrong?
In his State of the Union Address, Mr. Obama repeated a behavior pattern seen during the debate about budget cuts. He invites Senate/House members to come up with a solution to a problem, write a bill reflecting the solution, and send the bill to his desk for signature. This method is absolute nonsense. How are 535 disparate and squabbling Senate/House members going to suddenly join in concerted action and go through all these steps?
What are we paying Mr. Obama for? He is supposed to be leading, not waiting for other people to do everything.
Mr. Obama has hundreds of advisors, including economists and lawyers. He should order these advisors to write the bill he wants, and then present it to Senate and House for approval. Sure, it won't necessarily get immediate approval, but if it is a good bill in the eyes of the ordinary working men and women of America, Senate/House members will feel tremendous pressure to act, pass the bill, and send it to the president.
Can anyone provide leadership?
Currently we are not getting leadership from President Obama, or, with a few exceptions, from any other politicians in Washington.
Looking past the November 2012 elections, regardless of who becomes president, whether Mr. Obama or one of the Republican candidates, I doubt very much that we will get the leadership we need. All we can hope for is that the immutable principles of economics will solve our problem little by little, encouraging manufacturing in America to increase. Meanwhile our politicians will continue to dither and argue over trivial issues, unwilling to deal with THE key issue, manufacturing in America.
.
.
Good Ideas
A gentleman I met on twitter (I have unfortunately misplaced my record of his name) has a great idea. He says we should have a new official day: "Manufacturing Day". The object is to emphasize the importance of manufacturing in America. It would not be a holiday where we don't work. It would be a day where the American manufacturing workforce would be in the normal working mode, enriching America through manufacturing.
Another gentleman (@mitch_goldberg) also has a brilliant idea. He observes that investors are running around the world looking for third world economies that are growing. Example: BRIC. Brazil, Russia, India, China.
America's ordinary working men and women know America has been brought to its knees by the insane 50-year policy of sending our manufacturing jobs away. America is now almost a third world country. Mitch's idea is that investors should look right here in America. It is probably the best place to invest, because, despite the bumbling of most of our "leaders", American manufacturing is slowly recovering. I predict that this recovery will feed on itself and the rate of recovery will increase, making America a very good place to invest.
Another good idea
No one can deny that America is in bad shape. 25 million people unemployed. Foreclosures on millions of homes. Neighborhoods of empty homes deteriorating rapidly. Paved roads allowed to return to gravel. Shuttered factories rusting away. Portions of cities abandoned. Schools and bridges falling apart. All levels of government facing impossible deficits.
It is almost an episode of the TV show After People!
There is only one way to solve the problem: cut imports and increase domestic manufacturing. The wealth needed to have a viable economy and a liveable country comes from manufacturing and manufacturing employment. Many reactionary and stupid commentators and analysts don't accept these plain facts. One thing they do in the face of the above comments is start screaming about free trade and how we don`t dare interfere with free trade.
Free trade is great until it becomes EXPLOITATION. Here is an example of EXPLOITATION in trade:
Trade in manufactured goods between America and China, 2010.
U.S. exports to China. $93 billion
U.S. imports from China. $366 billion
Note the ratio of almost 4 to 1.
Trade deficit with China $273 billion
In contrast, here is the situation that would exist in balanced, reasonable and constructive free trade:
Trade in manufactured goods between America and China, 2010.
U.S. exports to China. $93 billion
U.S. imports from China. $93 billion
Note the ratio of 1 to 1.
Trade deficit with China ZERO
Now here is my good idea, if I say so myself!
On a country by country basis we have to control imports following the above pattern. Let's say country XYZ purchased manufactured goods from America in 2011, valued at $35 billion. We then say to country XYZ that we will allow entry of your manufactured goods into America in 2012, absolutely free of tariffs, duty, tax, etc., up to a limit of $35 billion. Once that amount of imports in 2012 has been reached, no further imports will be allowed.
We do this with each and every country we deal with, in this way eliminating our present devastating hemorrhage of wealth to foreign countries of over $500 billion per year. And in addition giving our domestic manufacturing breathing space to survive and grow.
One commentator has said that it is mathematically impossible for every country to achieve the status of net exporter. He is absolutely correct in saying this. My proposal herein is not that we try to achieve net exporter status. All we are trying to do is have balanced trade with other countries.
If my plan requires abrogation of World Trade Organization treaties and regulations so be it. If China gets furious and starts blustering, so be it. No nation can accept a $500 billion trade deficit hemorrhage year in and year out, into the indefinite future, ultimately leading to the complete destruction of that nation!
State of the Union Address
Now let's look at the State of the Union Address of January 24, 2012.
Here are some excerpts from the Address:
"We should start with our tax code. No company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas. From now on, every multinational company should have to pay a basic minimum tax. And every penny (of this new tax revenue) should go toward lowering taxes for companies that choose to stay here and hire here in America."
"If (a manufacturer) wants to relocate to a hard-hit community, (the manufacturer) should get help financing a new plant, equipment, or training for new workers."
"It is time to stop rewarding businesses that ship jobs overseas, and start rewarding companies that create jobs right here in America. Send me these tax reforms, and I will sign them right away."
"Expand tax relief to small businesses that are raising wages and creating jobs. So put them in a bill, and get it on my desk this year."
What is wrong?
Superficially, these statements from the State of the Union Address sound good. But there is a huge flaw. What is the flaw? The word "should" appears five times in these brief excerpts.
I am an ordinary private citizen. Out of 312 million people in America, only my loyal twitter followers, 100 or so, know about me and pay any attention to what I am saying. So I have no power to get anything done. When I propose some action, I have to use the word "should".
President Obama is THE PRESIDENT OF THE UNITED STATES OF AMERICA. We have all grown up regarding the president as the most powerful man in America. The president should not be saying "should". The president can get things done! He can say "we will do this" or "we will do that", or "I have ordered this" or "I have ordered that", while little no-account Ed Farkas can only say "should"!
I was an Obama supporter. But Mr. Obama has lost my support, due to his inaction and passivity.
Mr. Obama has been president for three full years and he is only now saying we "should" remove tax provisions that reward companies for moving jobs overseas?
UNNNNNN-BELIEVABLE!
He should have issued an executive order on day ONE of his presidency, suspending those tax provisions, as just one example of desperately needed actions that never happened.
What else is wrong?
In his State of the Union Address, Mr. Obama repeated a behavior pattern seen during the debate about budget cuts. He invites Senate/House members to come up with a solution to a problem, write a bill reflecting the solution, and send the bill to his desk for signature. This method is absolute nonsense. How are 535 disparate and squabbling Senate/House members going to suddenly join in concerted action and go through all these steps?
What are we paying Mr. Obama for? He is supposed to be leading, not waiting for other people to do everything.
Mr. Obama has hundreds of advisors, including economists and lawyers. He should order these advisors to write the bill he wants, and then present it to Senate and House for approval. Sure, it won't necessarily get immediate approval, but if it is a good bill in the eyes of the ordinary working men and women of America, Senate/House members will feel tremendous pressure to act, pass the bill, and send it to the president.
Can anyone provide leadership?
Currently we are not getting leadership from President Obama, or, with a few exceptions, from any other politicians in Washington.
Looking past the November 2012 elections, regardless of who becomes president, whether Mr. Obama or one of the Republican candidates, I doubt very much that we will get the leadership we need. All we can hope for is that the immutable principles of economics will solve our problem little by little, encouraging manufacturing in America to increase. Meanwhile our politicians will continue to dither and argue over trivial issues, unwilling to deal with THE key issue, manufacturing in America.
.
.
Friday, January 6, 2012
A short post
+
The situation we are in with China is by far the worst threat America has ever faced.
(other than our terrible wars, Civil War, World War II, Korean War, Vietnam War, Iraq War, Afghanistan War, and others)
And, we are giving China the trillions of dollars and our latest technology they need to destroy us.
Further, there is the definite possibility that it will go from an economic war to a shooting war.
Mr. Greg Autry is one of the authors of the book "Death by China". My comments above are based on some of Mr. Autry's material. Here are some further comments from Mr. Autry:
He has made the following point to the Wall Street Journal:
“…on its front pages (WSJ) carries good articles about the military threat posed by China. However on the inside pages the Journal fails to recognize the economic threat”.
Mr. Autry goes on to state:
“What enables China to build high-tech asymmetric weapons like the DF-21D anti-carrier missile is the continued naïve behavior of the American government and multinational corporations that transfer technology and vast amounts of American capital to a very dangerous state…
In any case, outsourcing our entire manufacturing supply chain to a hostile nation has to be about the stupidest strategic move that any world power has ever made.”
Two sides of the issue
An old saying is that there are two sides (at least) to every issue. In discussing the relationship between America and China, there are two sides. One side includes people such as Greg Autry and Ed Farkas who believe the relationship is an absolute disaster. The other side includes people who think the relationship is constructive and should be built upon for the future.
I say it is impossible for a sane person to sincerely believe that there is good in the relationship with China. I further say that the pro-China people all have an ulterior motive. In other words, the pro-China people are 100% corrupt.
Here are some of the ways that people are corrupt:
+ Writers, analysts, newsletter publishers, who believe that their material will be more readily accepted if they adopt a pro-China stance. And, they are correct in their belief!
+ Writers, analysts, commentators, newsletter publishers, who believe they will get many invitations to be on TV talk shows, if they adopt a pro-China stance. Again, they are correct in their belief!
+ Analysts and commentators who create what I call fantasy explanations (see previous posts August 18, April 23, April 21, 2011, November 26, 2010) to explain our current disastrous economic situation, without admitting that we did it to ourselves by sending our manufacturing jobs away and importing trillions of dollars worth of foreign-made goods.
+ People who simply want to be comfortably on the "winning" side where the money is and where the influence is.
+ Politicians who receive money from China lobbyists or from American companies who hope to do more business with China, and want to avoid any action that might annoy China.
+ People who believe, or pretend to believe, that any action that annoys China, such as commenting on the currency valuation issue, would lead to a "trade war". Are these people really so stupid that they cannot see that we are ALREADY in a trade war (economic war) and we are LOSING HEAVILY? These people have one of the ulterior motives mentioned above.
Here is an example. R. B. Reich was a brilliant man who rose meteorically and was the Secretary of Labor in the first Bill Clinton presidential term. Now Reich is on a TV talk show or similar event almost every day of the week. How did he achieve this success? By dumbing himself down. Recently he said that China has only a very small effect on the American economy and that China "merely assembles" goods.
What does he mean by "merely assembles"? If the assembly is so "mere", why don't we have it done here in America by some of the 25 million unemployed?
How can a formerly brilliant man, presumably devoted to America in the 1980s, now change his tune and make the outrageous and untrue statements quoted above? How can he look himself in the mirror every morning when he is shaving? Oh, right, he doesn't shave!
The San Francisco Federal Reserve Bank did a "study" of the involvement of China in the American economy. The result of the "study" is that China's involvement is only 2.7%, and the good news is that many thousands of jobs are created for truck drivers, ferrying Chinese-made goods around America.
A ten-year-old child could see the nonsense in this "study" result. Who told the Bank to make this study, and who told them what the result should be?
So here is another case of corruption. It is exactly the same as the joke about the dictator of a third-world country sitting in his office. His henchman comes in with an armload of documents. The henchman says "Here are the results of next month's election."
Another category
There is another category of people who probably have no ulterior motives but base themselves on simplistic statements and labels, as a substitute for opening the mind, looking at what is REALLY happening TODAY, and doing some thinking and understanding.
Examples:
+ People who say that restrictions on international trade caused the Great Depression and other depressions. These people use the empty scare word "protectionism". This word means nothing and is a substitute for thinking and understanding.
+ People who say that manufacturing cost is too high in America and unions caused our present problems. If there was any truth in these statements 50 years ago, there is no truth in them now. Again these statements are a substitute for thinking and understanding.
+ People who say that Americans don't want to work. Comment: No one has data to support this statement. There are 25 million people unemployed. No one can say that all these people don't want to work.
A special category
There are people who cannot believe that our business and government "leaders" have messed up our country so completely. I don't want to be too hard on these people. The realization that effectively there is no leadership is very frightening and de-stabilizing.
As stated in an earlier post (November 28, 2011), I am afraid that no man or woman who becomes president will be brave enough to stand up and break the chains of China and other low-wage countries. In a way I can understand the dilemma. Any president of the United States clearly gets his or her orders from powerful people behind the scenes who really run things. Maybe the president is even threatened with an "accident" or assassination if he or she stands up and breaks the chains.
At the same time I can't understand why the very wealthy and powerful people behind the scenes want to wreck America. How will they benefit from a wrecked America? I think the obvious explanation is that these extremely wealthy and powerful people are not sane.
Another category of illogical statements
People ask "How can we compete with China in manufacturing?"
American Institute of Chemical Engineers (of which I am a member) recently plaintively asked "How can we compete with China in R & D?".
The answer is that we should not even THINK about competing with China. There is no need to compete with China. We have a huge market in America of over 312 million people. Let us do R & D, design, engineering, and manufacturing, to serve this market. If we engage in trade, let us trade in manufactured goods only, with western countries with similar values, pollution and safety standards, and wage levels.
Speaking of western countries, if America rises up and breaks the chains of China and other low-wage countries, we will also do a great service to other western countries.
Why are the EU countries in such bad shape with huge unpayable debts? Answer: They have also lost their manufacturing, lost the employment, lost the wealth-creation, of manufacturing. If they see us breaking the chains, they will be encouraged to also break the chains.
What about Australia, Canada, United Kingdom? All in the same boat. All have lost major portions of their manufacturing. All have huge unemployment problems. In March 2011, the Prime Minister of Australia visited Washington and was given the royal treatment, including speaking to the combined Senate and House. She said, to rousing cheers, that Australia is doing great and the unemployment is only 5%. That statement is an absolute lie. The actual unemployment is at least 15%, probably more like 20%.
The behavior of Australia and Canada is analogous to that of people who sold scrap metal to Japan just before World War II. Australia and Canada are selling raw materials to China and also allowing China to purchase, for example, coal mines in their countries. So in addition to sending money to China, Australia and Canada are sending the resources that China needs to carry on the economic war.
The situation we are in with China is by far the worst threat America has ever faced.
(other than our terrible wars, Civil War, World War II, Korean War, Vietnam War, Iraq War, Afghanistan War, and others)
And, we are giving China the trillions of dollars and our latest technology they need to destroy us.
Further, there is the definite possibility that it will go from an economic war to a shooting war.
Mr. Greg Autry is one of the authors of the book "Death by China". My comments above are based on some of Mr. Autry's material. Here are some further comments from Mr. Autry:
He has made the following point to the Wall Street Journal:
“…on its front pages (WSJ) carries good articles about the military threat posed by China. However on the inside pages the Journal fails to recognize the economic threat”.
Mr. Autry goes on to state:
“What enables China to build high-tech asymmetric weapons like the DF-21D anti-carrier missile is the continued naïve behavior of the American government and multinational corporations that transfer technology and vast amounts of American capital to a very dangerous state…
In any case, outsourcing our entire manufacturing supply chain to a hostile nation has to be about the stupidest strategic move that any world power has ever made.”
Two sides of the issue
An old saying is that there are two sides (at least) to every issue. In discussing the relationship between America and China, there are two sides. One side includes people such as Greg Autry and Ed Farkas who believe the relationship is an absolute disaster. The other side includes people who think the relationship is constructive and should be built upon for the future.
I say it is impossible for a sane person to sincerely believe that there is good in the relationship with China. I further say that the pro-China people all have an ulterior motive. In other words, the pro-China people are 100% corrupt.
Here are some of the ways that people are corrupt:
+ Writers, analysts, newsletter publishers, who believe that their material will be more readily accepted if they adopt a pro-China stance. And, they are correct in their belief!
+ Writers, analysts, commentators, newsletter publishers, who believe they will get many invitations to be on TV talk shows, if they adopt a pro-China stance. Again, they are correct in their belief!
+ Analysts and commentators who create what I call fantasy explanations (see previous posts August 18, April 23, April 21, 2011, November 26, 2010) to explain our current disastrous economic situation, without admitting that we did it to ourselves by sending our manufacturing jobs away and importing trillions of dollars worth of foreign-made goods.
+ People who simply want to be comfortably on the "winning" side where the money is and where the influence is.
+ Politicians who receive money from China lobbyists or from American companies who hope to do more business with China, and want to avoid any action that might annoy China.
+ People who believe, or pretend to believe, that any action that annoys China, such as commenting on the currency valuation issue, would lead to a "trade war". Are these people really so stupid that they cannot see that we are ALREADY in a trade war (economic war) and we are LOSING HEAVILY? These people have one of the ulterior motives mentioned above.
Here is an example. R. B. Reich was a brilliant man who rose meteorically and was the Secretary of Labor in the first Bill Clinton presidential term. Now Reich is on a TV talk show or similar event almost every day of the week. How did he achieve this success? By dumbing himself down. Recently he said that China has only a very small effect on the American economy and that China "merely assembles" goods.
What does he mean by "merely assembles"? If the assembly is so "mere", why don't we have it done here in America by some of the 25 million unemployed?
How can a formerly brilliant man, presumably devoted to America in the 1980s, now change his tune and make the outrageous and untrue statements quoted above? How can he look himself in the mirror every morning when he is shaving? Oh, right, he doesn't shave!
The San Francisco Federal Reserve Bank did a "study" of the involvement of China in the American economy. The result of the "study" is that China's involvement is only 2.7%, and the good news is that many thousands of jobs are created for truck drivers, ferrying Chinese-made goods around America.
A ten-year-old child could see the nonsense in this "study" result. Who told the Bank to make this study, and who told them what the result should be?
So here is another case of corruption. It is exactly the same as the joke about the dictator of a third-world country sitting in his office. His henchman comes in with an armload of documents. The henchman says "Here are the results of next month's election."
Another category
There is another category of people who probably have no ulterior motives but base themselves on simplistic statements and labels, as a substitute for opening the mind, looking at what is REALLY happening TODAY, and doing some thinking and understanding.
Examples:
+ People who say that restrictions on international trade caused the Great Depression and other depressions. These people use the empty scare word "protectionism". This word means nothing and is a substitute for thinking and understanding.
+ People who say that manufacturing cost is too high in America and unions caused our present problems. If there was any truth in these statements 50 years ago, there is no truth in them now. Again these statements are a substitute for thinking and understanding.
+ People who say that Americans don't want to work. Comment: No one has data to support this statement. There are 25 million people unemployed. No one can say that all these people don't want to work.
A special category
There are people who cannot believe that our business and government "leaders" have messed up our country so completely. I don't want to be too hard on these people. The realization that effectively there is no leadership is very frightening and de-stabilizing.
As stated in an earlier post (November 28, 2011), I am afraid that no man or woman who becomes president will be brave enough to stand up and break the chains of China and other low-wage countries. In a way I can understand the dilemma. Any president of the United States clearly gets his or her orders from powerful people behind the scenes who really run things. Maybe the president is even threatened with an "accident" or assassination if he or she stands up and breaks the chains.
At the same time I can't understand why the very wealthy and powerful people behind the scenes want to wreck America. How will they benefit from a wrecked America? I think the obvious explanation is that these extremely wealthy and powerful people are not sane.
Another category of illogical statements
People ask "How can we compete with China in manufacturing?"
American Institute of Chemical Engineers (of which I am a member) recently plaintively asked "How can we compete with China in R & D?".
The answer is that we should not even THINK about competing with China. There is no need to compete with China. We have a huge market in America of over 312 million people. Let us do R & D, design, engineering, and manufacturing, to serve this market. If we engage in trade, let us trade in manufactured goods only, with western countries with similar values, pollution and safety standards, and wage levels.
Speaking of western countries, if America rises up and breaks the chains of China and other low-wage countries, we will also do a great service to other western countries.
Why are the EU countries in such bad shape with huge unpayable debts? Answer: They have also lost their manufacturing, lost the employment, lost the wealth-creation, of manufacturing. If they see us breaking the chains, they will be encouraged to also break the chains.
What about Australia, Canada, United Kingdom? All in the same boat. All have lost major portions of their manufacturing. All have huge unemployment problems. In March 2011, the Prime Minister of Australia visited Washington and was given the royal treatment, including speaking to the combined Senate and House. She said, to rousing cheers, that Australia is doing great and the unemployment is only 5%. That statement is an absolute lie. The actual unemployment is at least 15%, probably more like 20%.
The behavior of Australia and Canada is analogous to that of people who sold scrap metal to Japan just before World War II. Australia and Canada are selling raw materials to China and also allowing China to purchase, for example, coal mines in their countries. So in addition to sending money to China, Australia and Canada are sending the resources that China needs to carry on the economic war.
Thursday, December 15, 2011
Frightening
Question: What is more frightening than a horror movie?
Answer: A short video prepared by www.prosperousamerica.org
I was introduced to this video by Mr. Den Black of American Jobs Alliance.
What are some of the frightening things in the video?
+ Destruction of millions of jobs in manufacturing and in service industries.
+ China recently proved its capability to shoot down satellites, and generally is greatly enlarging and upgrading its armed forces, using our money!
+ Chinese graduate students in U.S. research universities are likely to take our new technology straight back to China.
+ A Chinese company is the biggest operator of ports in the world. U.S. west coast ports are not big enough to bring in goods as fast as China would like. A new port is under construction on the Pacific cost of Mexico. Goods will be brought straight to a distribution center in Kansas, via a new "trade superhighway".
Ed Farkas comment
The video is excellent. Every politician in Washington should be forced to see it. But a further frightening aspect of the video is that no strong solution to the problem is presented. The narrator even assures viewers that the organization behind the video is not "protectionist or isolationist".
Why? What's wrong with a bit of protectionism? The pendulum has swung so far in the other direction that we are about to destroy our economy completely.
I believe the U.S. president, the U.S. government, and many Senate and House members, are completely controlled by China*. Therefore nothing will be done to prevent the continued destruction of the American economy and America itself. Nothing will be done to prevent China from becoming the owner of thousands of American companies, including ownership of coal mines, oil fields, gas fields, etc.
*or by groups of American companies active in China, amounting to the same thing
Some possible solutions
A million man/woman march on Washington asking for jobs and the cutting of all ties with China. Might be enough to scare the people who control the U.S. government.
A million man/woman march on Washington asking for limits to terms of office, with maximum 12 years (or other suitable number) in Washington. To apply retroactively to sitting politicians, and of course to future politicians. I believe this is the only way to obtain something approaching rational and honest government of the USA.
(Our founding fathers made one huge mistake in their otherwise amazing and pioneering work of setting up the constitution and the new government and country of "USA". They forgot to put in limits to terms of office. The issue was discussed and was dealt with in early drafts of the constitution. However, limits to terms of office were not included in the final version. As a result, America has NEVER had rational, common sense, honest, government.)
If we could throw out hundreds of Senate and House members who are controlled by China, and bring in ordinary working men and women to replace them, we could get action to rescue America.
In some ant colonies, it has been observed that all the individual ants will suddenly act together to face an emergency. My new dream (scroll down to see previous dream in previous blog) is that Americans will similarly act together, spontaneously, and stop buying goods made in China or other Far East countries. The whole problem would be solved overnight. The people in Washington who are controlled by China, and China itself, would be thrown into absolute disarray.
If this dream were realized even in part, existing American manufacturers would ramp up, and hire additional workers, within weeks. A whole new spirit would be seen in America. We would tell China they don't have to bother completing their new port in Mexico. Or the trade superhighway to Kansas.
A key economic issue
I took some economics courses in college. That doesn't make me an economist. However I have made more sensible comments about causes and solutions of our current problems than thousands of economists put together.
An important fact taught in economics courses is this. If country X gets into real trouble because of too many imports, and thousands or millions of its workers are unemployed, the currency of country X will go down in value. As a result, imported goods will become very expensive; citizens of country X won't be able to afford them. There will be an opening for domestic manufacturing to re-vitalize. The problem will solve itself!
This mechanism is not working now. Why? Money managers all over the world who want to "park" money in relative safety look around and see the U.S. dollar as the best bet. Despite the severe economic problems faced by USA, people still want to buy U.S. dollars. The currencies of all other countries are worse!
For example, China a few years ago talked about the Euro becoming the world currency. But look at the Euro now! There is a real possibility that the Euro will disappear in the next few months.
Canada and Australia have severe unemployment due to sending manufacturing jobs away but have resources and raw materials to sell. So their currencies are not too bad. However the economies of these two countries are too small to allow "parking" of significant amounts of floating cash from around the world.
People appear not yet ready to park their money in India, China, or other "developing" countries. So the money pours into good old USA, keeping the U.S. dollar high.
It is very important to remember another important economic fact. Manufacturing provides benefits way beyond employment. Manufacturing provides a wealth-creation effect, also referred to as value-added. It is a subtle effect but a very substantial and significant effect. If an item is manufactured overseas, we lose the wealth-creation effect. That is why it is critically important to do our own manufacturing here at home.
Answer: A short video prepared by www.prosperousamerica.org
I was introduced to this video by Mr. Den Black of American Jobs Alliance.
What are some of the frightening things in the video?
+ Destruction of millions of jobs in manufacturing and in service industries.
+ China recently proved its capability to shoot down satellites, and generally is greatly enlarging and upgrading its armed forces, using our money!
+ Chinese graduate students in U.S. research universities are likely to take our new technology straight back to China.
+ A Chinese company is the biggest operator of ports in the world. U.S. west coast ports are not big enough to bring in goods as fast as China would like. A new port is under construction on the Pacific cost of Mexico. Goods will be brought straight to a distribution center in Kansas, via a new "trade superhighway".
Ed Farkas comment
The video is excellent. Every politician in Washington should be forced to see it. But a further frightening aspect of the video is that no strong solution to the problem is presented. The narrator even assures viewers that the organization behind the video is not "protectionist or isolationist".
Why? What's wrong with a bit of protectionism? The pendulum has swung so far in the other direction that we are about to destroy our economy completely.
I believe the U.S. president, the U.S. government, and many Senate and House members, are completely controlled by China*. Therefore nothing will be done to prevent the continued destruction of the American economy and America itself. Nothing will be done to prevent China from becoming the owner of thousands of American companies, including ownership of coal mines, oil fields, gas fields, etc.
*or by groups of American companies active in China, amounting to the same thing
Some possible solutions
A million man/woman march on Washington asking for jobs and the cutting of all ties with China. Might be enough to scare the people who control the U.S. government.
A million man/woman march on Washington asking for limits to terms of office, with maximum 12 years (or other suitable number) in Washington. To apply retroactively to sitting politicians, and of course to future politicians. I believe this is the only way to obtain something approaching rational and honest government of the USA.
(Our founding fathers made one huge mistake in their otherwise amazing and pioneering work of setting up the constitution and the new government and country of "USA". They forgot to put in limits to terms of office. The issue was discussed and was dealt with in early drafts of the constitution. However, limits to terms of office were not included in the final version. As a result, America has NEVER had rational, common sense, honest, government.)
If we could throw out hundreds of Senate and House members who are controlled by China, and bring in ordinary working men and women to replace them, we could get action to rescue America.
In some ant colonies, it has been observed that all the individual ants will suddenly act together to face an emergency. My new dream (scroll down to see previous dream in previous blog) is that Americans will similarly act together, spontaneously, and stop buying goods made in China or other Far East countries. The whole problem would be solved overnight. The people in Washington who are controlled by China, and China itself, would be thrown into absolute disarray.
If this dream were realized even in part, existing American manufacturers would ramp up, and hire additional workers, within weeks. A whole new spirit would be seen in America. We would tell China they don't have to bother completing their new port in Mexico. Or the trade superhighway to Kansas.
A key economic issue
I took some economics courses in college. That doesn't make me an economist. However I have made more sensible comments about causes and solutions of our current problems than thousands of economists put together.
An important fact taught in economics courses is this. If country X gets into real trouble because of too many imports, and thousands or millions of its workers are unemployed, the currency of country X will go down in value. As a result, imported goods will become very expensive; citizens of country X won't be able to afford them. There will be an opening for domestic manufacturing to re-vitalize. The problem will solve itself!
This mechanism is not working now. Why? Money managers all over the world who want to "park" money in relative safety look around and see the U.S. dollar as the best bet. Despite the severe economic problems faced by USA, people still want to buy U.S. dollars. The currencies of all other countries are worse!
For example, China a few years ago talked about the Euro becoming the world currency. But look at the Euro now! There is a real possibility that the Euro will disappear in the next few months.
Canada and Australia have severe unemployment due to sending manufacturing jobs away but have resources and raw materials to sell. So their currencies are not too bad. However the economies of these two countries are too small to allow "parking" of significant amounts of floating cash from around the world.
People appear not yet ready to park their money in India, China, or other "developing" countries. So the money pours into good old USA, keeping the U.S. dollar high.
It is very important to remember another important economic fact. Manufacturing provides benefits way beyond employment. Manufacturing provides a wealth-creation effect, also referred to as value-added. It is a subtle effect but a very substantial and significant effect. If an item is manufactured overseas, we lose the wealth-creation effect. That is why it is critically important to do our own manufacturing here at home.
Monday, November 28, 2011
Dream speech
Following is the Dream Speech that no American president will ever be brave enough to make.
(but see note below, after the end of the speech)
My fellow Americans:
I am speaking to you today to let you know that within the last few hours I have completed intensive discussions with the World Trade Organization (WTO) and with China and other countries.
I have informed WTO that America has given the global free trade experiment a very fair and thorough trial over a number of decades. We have found that the net result of the experiment is overwhelmingly negative for us. We have 50 million people unemployed and our towns and cities are tragically diminished versions of what they were in the 1960s. With so many people unemployed, tax revenue to all levels of government has almost disappeared.
Therefore I have further informed WTO, China, and other countries, as follows:
+ Effective today, America will no longer obey or be bound by WTO or other international trade regulations or principles.
+ Effective today, a 15% tariff is placed on all imported manufactured goods. This tariff will be increased to 20% six months from today, and 25% twelve months from today.
The object of the imposition of a tariff structure is to allow American manufacturing to begin to recover, and to give work to Americans, so that Americans can provide food, clothing, and shelter to their families, and can have the dignity that comes from a useful place in society.
The tariff structure will provide flexibility in the following way. If country X buys $1 billion/yr worth of manufactured goods from us, the first $1 billion/yr of manufactured goods imported from country X will be free of tariff. In this way, America demonstrates its belief in trade.
But America does not believe in a pathological situation where we buy $700 billion worth of goods from country Y while country Y buys only $175 billion worth from us. This type of situation is not "trade".
We note that China, in 2006, announced a long-term plan and strategy to make China self-sufficient in all manufactured goods. The Chinese people have operated their country on an advanced level for 5000 years. They know what they are doing. If they are pursuing a policy of self-sufficiency in manufactured goods, it must be a good policy for ALL countries. An old saying tells us "Sauce for the goose is sauce for the gander". In other words, what is good for one is good for the other.
America is ready to trade, as noted above, when other countries buy from us in approximately equal amounts. But we can no longer submit to sheer exploitation and destruction of our economy and our nation.
In 2011, there was a global economic downturn. China believed that it would not be spared from the effects, and therefore determined to turn more of its attention inward, to assist the people of China.
Again we follow the lead of China. America for many decades has had a substantial military presence in numerous areas of the world, and has been involved in the affairs of many countries. In view of the severe unemployment and economic problems here at home, this Administration will immediately work to greatly reduce our foreign involvements, so we can direct those resources to the home front. In particular, the resources will be used to assist in the re-development of our manufacturing base, and to assist in returning all Americans to prosperity. In keeping, I announce the end of the search for new international trade deals, and a very substantial cut in travel to international trade and economics meetings and summits.
In conclusion, America has met and overcome severe challenges in the past. From today we look forward to American hard work and initiative applied to the long road ahead to rebuild our manufacturing, rebuild the spirit of our people, and rebuild our nation.
I thank all Americans for their attention to my statement today.
Comment by Ed Farkas
I say above that no American president will ever be brave enough to make this speech. However, if nothing is done in the next five years along the lines presented in the speech, the economic situation of America will be much worse than now.
Therefore a future president may be FORCED to make this speech. Maybe there will be Vietnam-type marches in Washington, of millions of people, with one emphatic message for the President, his or her Administration, the Senate, and the House:
CUT IMPORTS AND RE-ESTABLISH MANUFACTURING, SO THAT AMERICANS CAN HAVE WORK AND THE ECONOMY CAN RECOVER.
Note: If the Dream Speech is ever given, it will be in the future. Therefore I have put futuristic numbers into the speech!
I saw in a newspaper recently:
A commentator said: "The economy stubbornly refuses to right itself".
Yes, correct statement, because there is nothing in the economy to allow it to "right itself". The economy is so far gone that there is no "right itself" mechanism left. The only way to get the economy going is to take PRO-ACTIVE, OVERT, EXPLICIT ACTION as described in the DREAM SPEECH!
(but see note below, after the end of the speech)
My fellow Americans:
I am speaking to you today to let you know that within the last few hours I have completed intensive discussions with the World Trade Organization (WTO) and with China and other countries.
I have informed WTO that America has given the global free trade experiment a very fair and thorough trial over a number of decades. We have found that the net result of the experiment is overwhelmingly negative for us. We have 50 million people unemployed and our towns and cities are tragically diminished versions of what they were in the 1960s. With so many people unemployed, tax revenue to all levels of government has almost disappeared.
Therefore I have further informed WTO, China, and other countries, as follows:
+ Effective today, America will no longer obey or be bound by WTO or other international trade regulations or principles.
+ Effective today, a 15% tariff is placed on all imported manufactured goods. This tariff will be increased to 20% six months from today, and 25% twelve months from today.
The object of the imposition of a tariff structure is to allow American manufacturing to begin to recover, and to give work to Americans, so that Americans can provide food, clothing, and shelter to their families, and can have the dignity that comes from a useful place in society.
The tariff structure will provide flexibility in the following way. If country X buys $1 billion/yr worth of manufactured goods from us, the first $1 billion/yr of manufactured goods imported from country X will be free of tariff. In this way, America demonstrates its belief in trade.
But America does not believe in a pathological situation where we buy $700 billion worth of goods from country Y while country Y buys only $175 billion worth from us. This type of situation is not "trade".
We note that China, in 2006, announced a long-term plan and strategy to make China self-sufficient in all manufactured goods. The Chinese people have operated their country on an advanced level for 5000 years. They know what they are doing. If they are pursuing a policy of self-sufficiency in manufactured goods, it must be a good policy for ALL countries. An old saying tells us "Sauce for the goose is sauce for the gander". In other words, what is good for one is good for the other.
America is ready to trade, as noted above, when other countries buy from us in approximately equal amounts. But we can no longer submit to sheer exploitation and destruction of our economy and our nation.
In 2011, there was a global economic downturn. China believed that it would not be spared from the effects, and therefore determined to turn more of its attention inward, to assist the people of China.
Again we follow the lead of China. America for many decades has had a substantial military presence in numerous areas of the world, and has been involved in the affairs of many countries. In view of the severe unemployment and economic problems here at home, this Administration will immediately work to greatly reduce our foreign involvements, so we can direct those resources to the home front. In particular, the resources will be used to assist in the re-development of our manufacturing base, and to assist in returning all Americans to prosperity. In keeping, I announce the end of the search for new international trade deals, and a very substantial cut in travel to international trade and economics meetings and summits.
In conclusion, America has met and overcome severe challenges in the past. From today we look forward to American hard work and initiative applied to the long road ahead to rebuild our manufacturing, rebuild the spirit of our people, and rebuild our nation.
I thank all Americans for their attention to my statement today.
Comment by Ed Farkas
I say above that no American president will ever be brave enough to make this speech. However, if nothing is done in the next five years along the lines presented in the speech, the economic situation of America will be much worse than now.
Therefore a future president may be FORCED to make this speech. Maybe there will be Vietnam-type marches in Washington, of millions of people, with one emphatic message for the President, his or her Administration, the Senate, and the House:
CUT IMPORTS AND RE-ESTABLISH MANUFACTURING, SO THAT AMERICANS CAN HAVE WORK AND THE ECONOMY CAN RECOVER.
Note: If the Dream Speech is ever given, it will be in the future. Therefore I have put futuristic numbers into the speech!
I saw in a newspaper recently:
A commentator said: "The economy stubbornly refuses to right itself".
Yes, correct statement, because there is nothing in the economy to allow it to "right itself". The economy is so far gone that there is no "right itself" mechanism left. The only way to get the economy going is to take PRO-ACTIVE, OVERT, EXPLICIT ACTION as described in the DREAM SPEECH!
Friday, November 18, 2011
A great sector
An amazing statement has appeared. Here is the statement:
"We don't have a tax problem, we have a revenue problem.
We've told American workers they're not valuable anymore, that it's better to do it overseas than it is right here. That's wrong. We need to reinvest in people, reinvest in manufacturing. That's how we're going to turn our economy around."
Statement made by Mr. Ed Schultz, of MSNBC.
Statement appeared in "The New Yorker" magazine, October 31, 2011, page 35
Comment by Ed Farkas:
I could write 10,000 words and not say it better than Mr. Schultz. There is censorship in effect aimed at preventing people from saying what Mr. Schultz has said. So it is apparent that the censorship is breaking down. Obviously Mr. Schultz and MSNBC are not afraid to make the above statement. This is the first time I have seen a public figure make a statement similar to the statement made by Mr. Schultz.
Further commentary by Ed Farkas:
Here in the United States we have a great manufacturing sector.
But, we have a manufactured goods trade deficit of over $500 billion per year with all foreign countries.
The meaning of "manufactured goods trade deficit" is that we are sending a net amount of over $500 billion per year to foreign countries to buy manufactured goods that we don't have the capacity to manufacture for ourselves here at home. Part of this money pays foreign workers to do our manufacturing for us.
(Why don't we have the manufacturing capacity? Because we voluntarily and on our own initiative shut down our capacity and laid off our workers!)
There are hidden costs associated with sending $500 billion per year out of our country. For example, a foreign expenditure is a much greater burden on a national economy, in comparison with a domestic expenditure.
The above amount is equal to over $1500 per year for each man, woman, and child in USA. This is real physical wealth going out of our country, never to be seen again.
Another hidden cost is that $500 billion per year could support millions of Americans working in manufacturing, including wages, factory equipment, and overhead. Instead, these Americans are unemployed, in despair, unable to properly support their families, standing in line at unemployment and welfare offices.
So all in all it is completely insane to be sending $500 billion per year to foreign countries.
50 years of history
American companies started sending manufacturing jobs to foreign countries in the early 1960s. I was there. I remember hearing about S_____ Company sending jobs overseas. It was the first time I had heard of this step being taken. I knew immediately that the result would be disaster, and I have been proven correct! (Unfortunately!)
I had just graduated from college. I did not major in economics. However I took enough courses in economics to have some understanding of the importance of manufacturing to any economy, and the predictable result of not having an adequate level of manufacturing.
Fast forward to today
Now I am saying that the only way to save the American economy, and the only way to solve our massive unemployment problem, is to get our manufacturing jobs back from overseas.
But today there are many politically correct people running around. People are telling me I should not use the words “get our manufacturing jobs back from overseas”. People are telling me that this wording implies that we are stealing the jobs.
In response I say that it is perfectly permissible to say “get our jobs back from overseas”. Very stupidly and short-sightedly we sent our jobs overseas, of our own volition and on our own initiative. So why can’t we say we made a huge mistake and now we want our jobs back?
However, I am flexible! I can change! I will change my wording. Here is the new wording:
We have to re-create domestic manufacturing of thousands of consumer, commercial and industrial items, and reduce or end importation of these items.
Aid
Now I have heard the most complete nonsense, since the last complete nonsense I heard. There was a news item in Canadian Press, November 16, 2011. How Canadian Press got this story or found it interesting I do not know.
According to this news item, the U.S. government had or possibly still has a program of giving money to American companies to help them get going in doing business in China.
The Republicans are currently blaming President Obama for this situation. However the fact is that this program started when the Republicans were in control of Senate and House.
But in trading blame back and forth, our “leaders” are missing the real point. Instead of giving money to help American companies get going in China, we should be giving money to help American companies get manufacturing going in USA!
The money came from the American government agency that handles foreign aid. The total budget of this agency is $20 billion per year. Now here is an agency that should be shut down! I am sure Republicans and Democrats can agree on this one.
If nothing else, here is another foreign expenditure burden, placing an extra burden on our economy, as discussed above.
Postscript
Here is a bit of good news. There was a news item on November 17, 2011, stating that Chrysler will invest $1.7 billion in a manufacturing facility in Toledo, Ohio. The facility will employ 1100.
Is there understanding at Chrysler that Americans want to buy American-made products, and is Chrysler prepared to provide American-made products?
Maybe the answer to both questions is "yes"!
"We don't have a tax problem, we have a revenue problem.
We've told American workers they're not valuable anymore, that it's better to do it overseas than it is right here. That's wrong. We need to reinvest in people, reinvest in manufacturing. That's how we're going to turn our economy around."
Statement made by Mr. Ed Schultz, of MSNBC.
Statement appeared in "The New Yorker" magazine, October 31, 2011, page 35
Comment by Ed Farkas:
I could write 10,000 words and not say it better than Mr. Schultz. There is censorship in effect aimed at preventing people from saying what Mr. Schultz has said. So it is apparent that the censorship is breaking down. Obviously Mr. Schultz and MSNBC are not afraid to make the above statement. This is the first time I have seen a public figure make a statement similar to the statement made by Mr. Schultz.
Further commentary by Ed Farkas:
Here in the United States we have a great manufacturing sector.
But, we have a manufactured goods trade deficit of over $500 billion per year with all foreign countries.
The meaning of "manufactured goods trade deficit" is that we are sending a net amount of over $500 billion per year to foreign countries to buy manufactured goods that we don't have the capacity to manufacture for ourselves here at home. Part of this money pays foreign workers to do our manufacturing for us.
(Why don't we have the manufacturing capacity? Because we voluntarily and on our own initiative shut down our capacity and laid off our workers!)
There are hidden costs associated with sending $500 billion per year out of our country. For example, a foreign expenditure is a much greater burden on a national economy, in comparison with a domestic expenditure.
The above amount is equal to over $1500 per year for each man, woman, and child in USA. This is real physical wealth going out of our country, never to be seen again.
Another hidden cost is that $500 billion per year could support millions of Americans working in manufacturing, including wages, factory equipment, and overhead. Instead, these Americans are unemployed, in despair, unable to properly support their families, standing in line at unemployment and welfare offices.
So all in all it is completely insane to be sending $500 billion per year to foreign countries.
50 years of history
American companies started sending manufacturing jobs to foreign countries in the early 1960s. I was there. I remember hearing about S_____ Company sending jobs overseas. It was the first time I had heard of this step being taken. I knew immediately that the result would be disaster, and I have been proven correct! (Unfortunately!)
I had just graduated from college. I did not major in economics. However I took enough courses in economics to have some understanding of the importance of manufacturing to any economy, and the predictable result of not having an adequate level of manufacturing.
Fast forward to today
Now I am saying that the only way to save the American economy, and the only way to solve our massive unemployment problem, is to get our manufacturing jobs back from overseas.
But today there are many politically correct people running around. People are telling me I should not use the words “get our manufacturing jobs back from overseas”. People are telling me that this wording implies that we are stealing the jobs.
In response I say that it is perfectly permissible to say “get our jobs back from overseas”. Very stupidly and short-sightedly we sent our jobs overseas, of our own volition and on our own initiative. So why can’t we say we made a huge mistake and now we want our jobs back?
However, I am flexible! I can change! I will change my wording. Here is the new wording:
We have to re-create domestic manufacturing of thousands of consumer, commercial and industrial items, and reduce or end importation of these items.
Aid
Now I have heard the most complete nonsense, since the last complete nonsense I heard.
Maybe the answer to both questions is "yes"!
Friday, October 28, 2011
An economic war not a trade war
Bipartisan action in Washington!
Under the leadership of Senator Stabenow of Michigan and Senator Brown of Ohio, and other senators, on October 11, 2011, the Senate passed a bill related to unfair currency manipulation by China and other trading partners.
The measure passed by a vote of 63 to 35, showing that Democrats and Republicans voted for the bill.
According to an article by Oliver Knox of Agence France Press, October 11, 2011, “the bill would empower U.S. businesses, and in some cases labor unions, to trigger a U.S. government investigation into alleged currency manipulations and seek retaliatory duties on imports from offending country or countries”. The bill “…also aims to make it harder for the U.S. Treasury to stop short of labeling China a currency manipulator, and restricts the White House’s ability to waive the resulting sanctions.”
Ed Farkas comment: President Obama in the past has made speeches in which he was critical of China in relation to the low value of its currency. However there was no action. This bill is an attempt to force the President and his Administration to act.
People are always asking for bipartisan action in government, to end gridlock and solve our problems. Here is a bill supported by both Democrats and Republicans, and yet unfortunately President Obama and his Administration do not support this bill. Why? That is a whole other story!
Reaction to passage of the bill in the Senate
The Knox article goes on to state: “China repeatedly condemned the proposed bill as it advanced in the Senate, accusing U.S. lawmakers of scapegoating Beijing for their own incompetence, and warning the bill could trigger a trade war.”
Reaction to passage of the bill in the Senate
The Knox article goes on to state: “China repeatedly condemned the proposed bill as it advanced in the Senate, accusing U.S. lawmakers of scapegoating Beijing for their own incompetence, and warning the bill could trigger a trade war.”
Republican Senator Graham stated: “The (passage of the bill) shows that we will not be bullied by China when it is clear they are in the wrong. We ignored the threats and do not apologize for taking this action.”
House of Representatives Speaker and Leader of the House, Republican John Boehner, “has signaled that he will not bring the legislation to a vote, calling it dangerous to economic relations (with China)…You could start a trade war. And a trade war, given the economic uncertainty… - it’s just very dangerous and we should not be engaged in this.”
“President Obama…worried (that the legislation) could violate World Trade Organization rules even as he accused China of ‘gaming the trade system’ in a way that hurts the U.S. economy.”
“Treasury Secretary Geithner reiterated Obama’s concerns about breaking international trade rules. However when asked whether senators had fired the first shot in a trade war, he replied ‘They did not’.”
Obama and Geithner on the Fence
Obama and Geithner are trying to have it both ways. They criticize China but aren’t brave enough to actually do anything to solve the problem.
Their comments bring out the really central issue we face:
Do we continue to obey World Trade Organization rules at the cost of complete destruction of the economy of the United States of America? (A destruction process that is already well along.)
Or,
Do we end automatic lockstep adherence to World Trade Organization rules, and instead work to reverse the damage done to the American people and the American economy?
U.S. Trade – Broader Prospective
People say that if we put restrictions on China, manufacturing will simply move to Malaysia or Viet Nam. Yes, this is correct. The answer is that we have to look at all countries in our foreign trade situation.
Our negative balance of trade in manufactured goods with all foreign countries is over $500 billion per year. Somewhat over half of this amount is due to China.
Here is the list of the main countries we trade with:
China
EU
Mexico
Japan
ASEAN
Canada
I have left out OPEC, on the assumption that trade with OPEC is mainly oil, rather than manufactured goods.
Mexico and Canada provide manufactured goods and oil. I estimate that trade in manufactured goods with Canada is less than 4% of the total of over $500 billion, substantially smaller than any of the others listed above.
ASEAN is The Association of Southeast Asian Nations. ASEAN is made up of Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei Darussalam, Viet Nam, Lao PDR, Myanmar, and Cambodia, ten countries in all.
The important thing to note is that our balance of trade in manufactured goods is NEGATIVE with every one of the countries or groupings listed above, repeated here for clarity:
China
EU
Mexico
Japan
ASEAN
Canada
In other words, we are a net importer of manufactured goods from every country or grouping listed above.
In simplest words, this is not good!
Trade
The word “trade” carries a meaning of some degree of equality. If two ten-year-old boys are trading baseball cards or chaotic cards, we are not going to see one boy giving all his cards to the other boy and receiving nothing in return.
So the word “trade” absolutely does not apply to our economic relations with the other countries of the world.
Trade War
As quoted above from the Knox article, people say that we could get into a trade war if we try to do anything about China’s currency valuation.
Senator Brown, also referred to above, is much more perceptive. Referring to the bill that was passed by the Senate, Senator Brown said:
“We are in a trade war. But today we’re fighting back. (We want to end) the unilateral disarmament approach we’ve taken for the past decade.”
Senator Brown understands that we are already in a trade war, really an economic war, but up to now we have not defended ourselves in this war. .
So the dire warnings that “we could get into an economic war” are absolute nonsense. We are already in a war and further we are very close to being utterly defeated in this war.
The issue of China
When I mention or discuss China, I always have in mind the additional countries that are not buying from us in approximately equal amounts.
It is an easy shortcut to say “China” without adding the above proviso.
“Scapegoating China” is the most stupid phrase to come out of the whole mess we are in. No one is scapegoating China. If we blame China for things it has actually done, that is NOT scapegoating. China has manipulated its affairs so as to keep its currency artificially low. China has announced a policy of becoming self-sufficient in all manufactured goods. The policy includes stealing technology from the United States and other western countries.
To clarify and emphasize, China wants to reduce purchasing from the United States and other western countries, from the present moderate levels TO ZERO.
China wants to supplant U.S. firms that are manufacturing items being sold to China or other foreign country. China wants to become the world’s supplier of these items.
China is supposed to be very clever in economic issues, with over 5000 years of experience. Certainly China runs rings around naïve western negotiators such as President Clinton, President Bush, President Obama, Secretary Geithner, and Secretary Clinton.
China has set itself two objectives:
Item 1. Keep the United States as a large consumer of Chinese-made products. In support of this objective, China works to prevent discussion in the U.S. media of the problem of importation of Chinese goods and ways to reduce the resulting damage to the American economy.
Item 2. Develop China as THE world supplier of all manufactured goods, and in support of this objective complete the destruction of the U.S. manufacturing sector.
You don’t have to hold a PhD in economics to see that these two objectives are mutually exclusive. They are in total conflict with each other. So the Chinese aren’t so smart after all.
Huge Mistake
This is the same mistake made in the 1960s when U.S. manufacturers began to send their manufacturing jobs overseas. If Americans don’t have employment, how are they going to buy the goods made overseas?
Huge Mistake
This is the same mistake made in the 1960s when U.S. manufacturers began to send their manufacturing jobs overseas. If Americans don’t have employment, how are they going to buy the goods made overseas?
The first companies sending their manufacturing overseas were OK because other American companies were still employing Americans. But it is a “reductio ad absurdum” situation. Now, 50 years later, so many jobs have been transferred overseas, with resulting loss of so many jobs, that there is significant reduction in ability to buy.
It is very funny, in the sense of dark humor, to see executives of U.S. manufacturing companies complaining about slow sales in the U.S., when these are the very companies that sent jobs overseas. It is equally darkly humorous to see the CEO of Wal-Mart testifying before Congress about poor business conditions, when the CEO of Wal-Mart has helped create poor business conditions by insisting on sourcing from China rather than from thousands of existing American domestic manufacturers.
Speaker Boehner says the recent Senate action is "dangerous to economic relations with China". He has it all wrong. What is really "dangerous" is having "economic relations with China"!
I say that the only way to save America is to cut all economic ties with China and other countries that don’t buy from us in approximately equal amounts. I predict we will not be successful in getting an adjustment in the value of Chinese currency, or in getting China to reduce or stop the stealing of our technology. These things simply will not happen. But even if they did happen it would not solve the problem of our unsustainably large importing of manufactured goods from all foreign countries.
Speaker Boehner says the recent Senate action is "dangerous to economic relations with China". He has it all wrong. What is really "dangerous" is having "economic relations with China"!
I say that the only way to save America is to cut all economic ties with China and other countries that don’t buy from us in approximately equal amounts. I predict we will not be successful in getting an adjustment in the value of Chinese currency, or in getting China to reduce or stop the stealing of our technology. These things simply will not happen. But even if they did happen it would not solve the problem of our unsustainably large importing of manufactured goods from all foreign countries.
Subscribe to:
Posts (Atom)
