Where are American jobs? Politicians keep talking about them, but can we really expect to see them? Tax cuts have been proposed by the right and stimulus measures have been proposed by the left — but neither of these will have any meaningful, positive effect on our economy. We can no longer continue the status quo.
The thing politicians in our government like about a free market is that it allows them to be lazy. Republicans and Democrats alike can blame economic problems on the market being "cyclical," going through "ups and downs," or "evening out." There has also been much finger pointing on both sides of the aisle. This is all simply nonsense: the real problem we face is a lack of leadership, a lack of planning.
Look at China. It has the largest population of any country on the planet and has risen from Third World status to become an industrial nation in the span of a decade. We do not want to model ourselves after a country that lacks basic human rights, but it is at least clear that the Chinese government is serious about jobs and building up its middle class.
Dominic Barton, The global managing director of consulting firm McKinsey, has lived in Asia for nearly the past decade. He recognizes Beijing’s slavish obsession with economic indicators like GDP as part of the Chinese government’s concern for job creation.
"The leadership in China is always worried about how to stay ahead of the growth to create enough jobs," Barton told the Reuters news agency earlier this year. "They know that if they don’t and there are disruptions and the people don’t have jobs, there will be revolution."
That is something that leaders in Washington need to realize as well.
In 2010, China had a trade surplus of $272.5 billion. With import tariffs ranging from 25 to 300 percent, China has the money to not only employ citizens but also to create high-speed rail projects that the United States can only dream of doing. In fact, the nation is earning so much, it can afford to help keep the American government running. As of July 2011, the United States owed over $1 trillion to China.
The U.S. is supposed to be a superpower, yet this "communist" country is beating us economically. While China was making profits and improving its infrastructure, our national debt grew to over $14.4 trillion in 2010, and our balance of trade deficit was $561 billion that same year.
It is no wonder that the United States is unable to balance its budget without taking on debt from other nations.
We need a plan to protect American jobs. Clearly the "free" market we have been practicing for decades is too expensive.
The "free" market, in conjunction with "free" trade, allows the rich to get richer while the middle class evaporates. The rich get richer by exploiting cheap labor over seas. The middle class and the poor get poorer as they take jobs earning lower wages…It may seem that the poor are bleeding the government dry via welfare, but in reality they want to work; the just can’t find jobs.
Meanwhile, there are more and more jobs for a rising middle class in China: jobs that once belonged to American workers. The wealthy in the United States are not worried about the disappearing domestic market — American citizens who can afford to buy their goods — because they are creating a new marketplace to sell their products in China.
The problem with the American jobs market comes into view when we look at the so-called "plans" coming from Washington. President Obama wants to rebuild infrastructure, but without Buy American clauses, he will only be giving dock and construction workers temporary employment. Obama is also pushing more job-killing "free" trade deals, which means that those workers will go home only be able to buy foreign-made products. This just puts more and more money in the hands of China and other wealth-producing nations.
By cutting more and more taxes to appease the right, there is less money to help the poor that this system creates. It truly is in a downward spiral; one that can only spell the end of the American dream. While Obama’s recent plan is the best offered up to this point, it will not have the kind of lasting effects the nation needs by itself. At best, this plan will merely keep Obama employed four more years.
The real solutions are simple, but may be hard to see for politicians who are only concerned with their next election. That is the first part of any real solution: our leaders must look to the long term, and be brave enough to put their chance at re-election at risk in the interest of helping our nation. We have waited to work on any sort of real recovery for too long, and there will be some pain to get back to stability. The longer we wait, the harder it will become. We need true, fearless leadership from our politicians so we can right this ship.
The first thing we must do as a nation is withdraw from all organizations that would not allow the United States to put its own best interest first. The World Trade Organization needs to be the first on the chopping block. We cannot allow this supra-governmental body any opportunity to act as a judiciary body against us.
Since entering the WTO in 2001, trade with China has resulted in the loss of 2.4 million jobs through 2008, according to the Economic Policy Institute. The states hit the hardest during this mass exodus were California (370,000 jobs), Texas (193,700), New York (140,500), Illinois (105,500), Florida (101,600), Pennsylvania (95,700), North Carolina (95,100), Ohio (91,800), Georgia (78,100), and Massachusetts (72,800). (All numbers are current as of 2008.)
More than 40 percent of our trade deficit to China was the rapidly growing imports of computer and electronic parts. By leaving the WTO, we could put equalizing tariffs on products coming from China, potentially bringing back over 1 million jobs in computer and electronics, computer accessory manufactured goods and fabricated metal production, as well as professional, scientific, and technical services. There would no longer be any compelling reason to build needed products overseas, and the money earned through tariffs could be used to stimulate the economy without borrowing or raising taxes.
Once out of the WTO, the next step must be rewriting our trade deals. We are currently in one-sided "free" trade pacts like the North American Free Trade Agreement. These have put us at a major disadvantage, in both the global economy and our economy at home.
These lopsided "free" trade deals put American workers in direct competition with workers in other countries who earn much lower wages. To produce here in America, manufacturers would need to pay their workers $18-20 per hour. That same product can be produced right across the border in Mexico, at wage rates of just $3 per hour, and then shipped back to the U.S. duty- and restriction-free. The United States has literally incentivized the off-shoring of American jobs through "free" trade and tax breaks to companies that outsource.
We must turn these trade agreements into fair trade deals that will create an equal market place — one where American companies can compete in the largest global economy — the United States. Only then will we have jobs, and we will be able, once again, to produce for ourselves.
In the short term, prices for goods will go up. In the long term, however, with the return of good paying jobs, Americans will be able to afford them. Otherwise, if we stay this course, unemployment will only continue to rise. T-shirts that cost $5 may be very appealing, but who will be left to wear them when consumers cannot even afford a $1 loaf of bread?
To compete globally we still need to export. We must become a strong manufacturing nation again. Rather than continuing to fight in today’s trade war, we can prepare to compete overseas with tax reform. We can do this by implementing a Value Added Tax (VAT), a tax that has been adopted by most European nations. We should follow their lead.
As we raise tariffs, so will our competitor nations. We should negotiate with countries one at a time, making trade and competition with other nations fair. As the playing field in other countries levels out compared to ours — wages rise, environmental standards are imposed and enforced, currency manipulation ends — we can lower the tariffs we impose on goods from those nations. In the interim, we can still tax imports on top of the tariffs, as other nations do to us currently.
We can then use the money earned through tariffs and a VAT to subsidize American exporters, just as our competitors are doing to us now. Germany charges a 19 percent VAT on goods entering their country and offers rebates to their companies when they export. This gives them a huge advantage over the U.S. Foreign companies can afford to charge less both at home and here in the U.S., while our companies are forced to charge more to cover the cost of the foreign VAT.
For example, American auto companies do not receive government funding like German and other foreign car makers do. GM and Chrysler had to declare bankruptcy while foreign auto makers received government kick-backs.
With consumer spending making up 70 percent of our GDP, and 70 percent of that money being spent on foreign-made products, there would be enough money from a VAT and tariffs to dramatically lower the income tax.
Foreign nations will still need a place to sell their products, and Americans will have to buy them until we get our manufacturing going again. However, this would mean more money in the pockets of Americans as the government will have the funding to stimulate domestic production. Production jobs lead to shipping and sales jobs. These in turn create more jobs.
Our country was built on tariffs. They paid for our railroads, our wars, and even our government until 1913. With money legally earned through tariffs and a VAT, we would have the funding to rebuild our infrastructure and allow our transportation to catch up with the rest of the developed world. That would mean jobs for Americans. However, all building projects must include Buy American provisions, or we will continue to watch American wealth pour overseas.
To prepare for these jobs, we must fix education. We are currently ranked as one of the lowest in education among First World countries. Our lowest scoring schools should still be the first in the world. How can we expect to be a strong, vibrant economy if we are not an educated, working economy? Education enriches not only the mind, but also teaches working standards as well.
We must also end our wars overseas. Our greatest battle is at home: saving our economy. While keeping troops overseas may make job numbers look better, it makes our national bank account look worse. If other nations want us to act as their military — as their world police — they should pay for it. They should not only cover our costs, we need to earn a profit that we can take home and use to pay for our own defense. Freedom isn’t free. If they want a lower price or more say in the matter, they can become a U.S. territory and apply for statehood.
Last, and perhaps most important, the idea that money equals speech must end, along with the false notion that corporations are people. We need a Constitutional Amendment that clearly states that to be a citizen, one must have a pulse. This amendment should also define, and not redefine, speech as written, verbal or other physical communication, such as sign language.
Money is not speech. It is not a way to speak louder. It is merely a way to quietly subdue the free speech of others. If speech is free and money is speech and all men and women are created equal, then we should all have equal wealth to ensure we all have the equal right to speak. This would be absurd, and if our Supreme Courts cannot see this error, then we must make an Amendment to clarify the intent of our Constitution.
In summary, we can make it out of this Great Recession as a nation. But to do so, we must have a plan. We must defend our economy as we defend our borders, working together to end our current class warfare. Our leaders need to think long-term and fight more for the success of our nation than the success of their next election. If voters do not see them as heroes now, let the historians correct that mistake. We cannot keep dragging on. The time for action is now.
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