In the first Viewpoint we discussed the “deliverables” on trade agreements by our trade negotiators and drew a comparison of government results versus the private sector approach. We touched on differences in how public versus private leadership thinks and acts. This edition will focus on some of the consequences of those results.
We noted that studies indicate the manufacturing sector alone has lost 4.5 million jobs due to trade deficits. Many studies put the total number of lost jobs between 11 and 13 million. When we add in shifts in employment from jobs with benefits to part time jobs without significant benefits, reduced hours and the like the number grows to 17-18 million unemployed or under-employed in the United States. Another way to look at it is the loss of a like number of taxpayers and a substantial number of those former taxpayers on some form of public assistance. In an economy characterized by massive foreign debt (including the trade deficit), horribly misdirected “stimulus” efforts, a Fed that continues to print money to “pay” for “stimulus” and social programs the burden falls on fewer remaining taxpayers to shoulder the load. What are some of the results?
- Subsidized and increasingly inefficient health care (efficiency and government seldom belong in the same sentence).
- A huge percentage of the population on food stamps, mortgage/rent assistance.
- An increase in the percent of the population at the poverty level.
- A real danger of a currency value bubble situation that would be destructive to virtually everyone in the United States.
- Excessively long unemployment benefits that discourage seeking work.
- Massive outstanding student loans whose payment is questionable.
- Programs like Trade Adjustment Assistance (more on that in a future edition) crop up.
In the business sector the results of unfriendly government policies drive companies offshore at worst and freeze expansion at best. This relates directly to the pitiful job creation numbers this economy has produced for all too long. Several economists have discussed this particular result in some depth, none more eloquently than Peter Morici. I’d urge readers to look at his “stuff.” It is on the mark.
Fixing the trade deficit could go a long way to reverse what is happening. If we don’t fix trade the situation will only worsen. Why?
- Along with the factory floor moving or not expanding goes R&D, product development, engineering. You know, those high tech jobs pundits talk about. Practical research locates where things are produced.
- Eventually, education follows. The notion that technical education will always happen here is sheer folly. If your R&D, product development and factory floor are located elsewhere and in another language, why educate here?
- The cycle of lower paying jobs, part time jobs and social welfare continues. In the northern hemisphere the flushing cycle is counterclockwise……
There are many things we can do to reverse this cycle. In the trade arena I’d urge readers to visit the web site of the Coalition for a Prosperous America (www.prosperousamerica.org). Look at their strategies on smart trade. Their 21st Century Trade Agreement Principles paper clearly outlines fixes. Then, urge your elected representatives to adopt them and work to get these principles in place. After all, they are supposed to represent the working people in America. We need to wake them up!
Next time we visit we might take a glimpse at a program like TAA and how it really works for real families based on actual experiences.