For the decade ended 12/31/2011, the U.S. total trade deficit with all nations totaled $6.3 trillion, by far the most in our history, and no doubt the biggest such loss of national wealth by any nation in world history! American taxpayers must pick up the tab, though it’s not their fault at all.
Why is this figure important? Answer: it’s the best single measure of how well American business is competing in our own domestic market, by far the largest and richest in the world. The huge, ever-growing trade deficit says we’re losing badly in that competition. Every day, the U.S. must borrow $2 billion abroad to cover it. How did this happen? Who benefits and who’s hurt by it? Most important, can it be stopped and turned around to our advantage? Who from business should take the lead?
First, our trade deficits needn’t have happened at all! Who’s to blame? Our own multi-national companies must bear heavy responsibility. America’s demise has already begun with the trade debt we’ve taken on,the extensive damage to our biggest industrial cities, and the ongoing dismantling of our productive capacity. Fifty-five thousand U.S. manufacturers closed their doors in the past decade, while we became the world’s biggest debtor, much of it to China. We’re headed toward failed-nation status. Who should take the lead to stop this national tragedy? Answer: Our multi-nationals must step up! They have the money, and with it the needed political clout!
By far the best solution is to restore balanced trade as national policy. Federal law would require that U.S. total annual imports not exceed our exports. A bill to implement this plan was drafted by Democrat Senators in 2006, but got nowhere under former President Bush and still has not been taken up by President Obama due to opposition by “free trade” economic advisors. An estimated 3 million jobs would be created during a 2-year phase-in period, $700 billion of annual production would revert to U.S. companies, and our trade deficits would be eliminated. We’d be on our way to recovery, but we’d still be the world’s biggest importer – that’s hardly protectionism. It’s being prudent about our finances and fair at home and abroad. A healthy, growing U.S. market and industries would be best for all nations.
Where do U.S. multi-nationals stand on this proposal? There’s not been any open dialog. Recent confidential discussions with a leading multi-national that also has big domestic U.S. operations failed. They like our current one-sided free trade policies and don’t see the domestic economy as their responsibility. They say, “If we lose some business here, we’ll more than make it up abroad.” But trade experts strongly believe there has to be a balanced trade plan that won’t hurt the multi-nationals’ interests abroad. Will a patriotic multi-national leader please come forward now to open the much-needed discussions! America is in very deep trouble!
Kenneth Davis is a former U.S. assistant secretary of commerce/international, IBM vice president and chief financial officer, and investment banker.
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Posted March 27, 2012 at 9:42 am, in Free Speech Zone