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U.S. Trade Deficit

US Money - USA-Focus.org

“The best thing you can do right now is [to have] your surplus matching their deficit, their surplus matching your deficit. In the end you come out even.” 2 Corinthians 8:14

“Love others as you love yourself. That’s an act of true freedom. If you bite and ravage each other, watch out—in no time at all you will be annihilating each other, and where will your precious freedom be then?” -St. Paul, (“The Message” translation)

FOUNDING FATHERS’ PERSPECTIVE

“Beware the greedy hand of government thrusting itself into every corner and crevice of industry.” (Thomas Paine)

“If ever again our nation stumbles upon unfunded paper, it shall surely be like death to our body politic. This country will crash.” (George Washington)

“I place … public debt as the greatest of the dangers to be feared … .” (Thomas Jefferson)

“The purpose of government is “… to secure the blessings of liberty to ourselves and our posterity.” (The Preamble to the U.S. Constitution)

“The purpose of government is, “to promote the general welfare…” (The Preamble to the U.S. Constitution)

“I hold it as a truth that if industry and labour are left to take their own course, they will generally be directed to those objects which are most productive, and this in a more certain and direct manner than the wisdom of the most enlightened legislature could point out.” (James Madison)

“It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy …. What is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” (Adam Smith, Founding Father of Capitalism)

FACTS

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot alter the state of facts and evidence.” (John Adams)

◊  The U.S. is 5% of the world’s population, but consumes 30% of all its resources. If the rest of the world consumed at this rate, it would take 4 more PLANETS the size of Earth to support everyone.
BBC Magazine, 6/16/15. “How many earths do we need?”
Global Alliance for Incinerator Alternatives “Consumption”

◊  Since 1976, the USA has increasingly consumed more from other countries than it produces and sells to them…over $735 billion more. This is the largest trade deficit in the history of the world and cannot be maintained indefinitely. The U.S. trade deficit solely with China is $360 billion.
US Debt Clock
Huffington Post, 3/24/12. Kaplan, Gilbert B. “The Largest Trade Deficit in the History of the World” 

◊  80% of the countries the U.S. trades with, have a labor cost and standard of living that is significantly less expensive than the US.
NUMBEO “Cost of Living Index 2016”

◊  Historically, the U.S. has employed both tariffs and free trade policies to try and remedy this trade imbalance. Tariffs are usually more popular during wartime and recessions. Free trade is usually practiced during peacetime and prosperity.
Encyclopedia Britannica. “Protectionism”

◊  The U.S. imposes tariffs on 12,000 different imported products.
Business Insider, 9/27/10. “25 American Products that rely on huge tariffs to survive”

◊  The U.S. has free trade agreements with 20 countries.
Office of the US Trade Representative. “Free Trade Agreements”

SUMMARY

Since 1789 (when President George Washington signed the first tariff bill) and continuing today, America has never found a way to maintain a balance in our nation’s production and consumption. Politically, it has always been an argument between free traders and protectionists. Neither extreme has ever maintained a balanced economy over an extended period of time.

Historically, both free trade and protectionism have been championed by respected thinkers, e.g. Adam Smith, and the four presidents on Mount Rushmore, respectively. But 240 years later, with America’s economy (and the world’s) in the most unmaintainable position it’s ever been, we must look beyond traditional extremes of Isolationism-or-Exploitation if we hope to solve the growing economic inequality among trading nations.

The U.S. must stop repeating the lie that the primary reason Americans are unemployed is because “free trade has sent all our jobs overseas.”  Americans are unemployed and suffering economically:

… because over one-third don’t even WANT a job.
Washington Examiner, 5/9/16. “Opting out of the Labor Force.”

… because their work ethic and level of education is so poor that our U.S. workforce is ranked inferior to 13 other nations and businesses are forced to import workers who have the needed skills.
“IMD World Talent Report 2015, pg. 4.

… because our school system is totally inadequate in preparing our children to be independent, contributing members of our society and we stand by and do nothing about it.
Pew Research, 2/2/15. “U.S. Students…still lagging internationally”

… because our government has created an entitlement society that has no personal accountability, resulting in a rotting away of the moral/spiritual principles in our national identity that founded the United States.
Forbes, 7/2/14. “Most Americans now receive government benefits”

… because instead of using the availability of less expensive foreign goods as a way to save money or start new businesses, we’ve let our greed drive us to inflate our personal standard of living and go deeper into debt.
Money Magazine, 12/9/15. “Americans sinking further into credit card debt”

POSSIBLE SOLUTIONS

◊  The urgent need is NOT for an international trade summit on tariffs and free trade, but for an international trade summit on morals and values. Good faith bargaining is the cornerstone of trade. International good faith can’t be achieved until the world’s countries agree to honestly address the lying, stealing, greed, human exploitation and environmental destruction that lies at the heart of every nation’s attempt to gain trade advantages over their neighbors. Countries that refuse to participate in a Moral Values trade summit need to be cut off as trading partners from the rest of the world community until they comply.

◊  There must be an acknowledgement that the principles of protective tariffs and free trade are not hopeless adversaries, but are compatible.

Tariff advocates must acknowledge that time cannot be frozen nor turned backwards. The answer to losing lesser jobs to countries with lower standards of living, is not to artificially inflate prices or draw a wall around your nation. The solution is to keep your OWN workforce moving ahead with the education/skills needed for the ever-appearing new jobs and products of tomorrow that can be exchanged with trading partners.

Free Trade advocates must acknowledge that unlimited free trade is only going to work when the world’s nations can simultaneously practice unlimited ethics in their human, environmental, and business activities. Because this enlightened state has not yet been demonstrated by any country, there is still a need to make some kind of regional adjustments on the price of goods and services between countries whose standards of living differ dramatically.

When the world chooses to trade with each other in this more ethical, moral manner, “the steady gain of man” will start to evidence itself. We’ll start to see an economy – in America and around the world – that successfully practices free market exchanges, while simultaneously using reasonable regional price adjustments, when necessary, to avoid exploitation of any party. The result of this would be the reduction of trade deficits to a manageable level in all countries.

Brief #1A: June 6, 2016

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