Vail Daily letter: Out of balance
Vail, CO, Colorado
Everybody wants jobs, but there’s a fundamental problem that is seldom discussed. Our average trade deficit for the past 10 years has been about $500 billion per year. The last positive trade balance was in 1975. This has been the result of 30 years worth of “globalization” and “free” trade agreements.
The “free” part is grossly misleading. While we get cheaper consumer goods, the agreements have cost us millions of jobs, particularly in manufacturing.
Consequently, attempts by the government to create jobs by stimulating the economy aren’t very effective because too much of the stimulus money flows out of the country. Jobs are created in China and other countries.
For example, “American” Apple products (iPhone, iPod, iPad) are manufactured in China. While the profits go to Apple stockholders, the much greater manufacturing investment and jobs go to China.
Business investments that create jobs here won’t happen until there is increased demand for domestic products and an increase in exports.
Participate in The Longevity Project
The Longevity Project is an annual campaign to help educate readers about what it takes to live a long, fulfilling life in our valley. This year Kevin shares his story of hope and celebration of life with his presentation Cracked, Not Broken as we explore the critical and relevant topic of mental health.
Neither political party will address this issue because of large campaign contributions from our corporations that benefit from low-wage, offshore labor.
Moreover, we have a tangled relationship with China. We buy their consumer goods and grow their economy while they buy our debt (bonds). Consequently, we end up owing them hundreds of billions with interest, a rather one-sided arrangement that is unsustainable.
We help other countries grow at the expense of our own economy. Note that Germany has a relatively stable economy because it exports almost as much as China. If a small “socialistic” country like Germany can have a positive trade balance, we could surely reduce our trade deficit substantially.
Correcting this problem without causing trade conflicts will not be easy. We need a plan. Thus far, our ad hoc “industrial policy” has neglected our workers. We need something more deliberate (e.g. Germany).
Until we better prepare and protect our workers and correct our gross trade imbalance, we won’t recover from this ongoing economic contraction.
Capitalism needs to reform itself, or the next revolution will be in the USA.