Here's a number: four hundred eighty-four billion dollars. Does anyone know what this number is? Could it be the amount of cash Hillary Clinton raised from Wall Street bankers this year? Nope. It's too large even for that. Is it the cost of vacations for president Obama and his family since he first took office? Nope. Is it some estimate of waste, fraud and abuse in federal government spending? Nope. Here's the answer: it's the trade deficit of the USA in 2015 (which was just released). That's right, Americans spent nearly half a trillion dollars more on imports that other countries spent on our exports.
This is a sad number. Just think how many more people would have jobs it America sold as much abroad as it buys from other countries. Or how about if that half trillion dollars was directed instead to American made goods; just think how many millions of people would get jobs from that.
The current push in politics is that the USA made bad trade deals and that accounts for the trade imbalance and the jobs migrating overseas. That's a rather simplistic analysis, however. The truth is that much more important than the trade deals are the policies of the federal government that punish American companies for manufacturing things here in the USA. If Ford manufactures a car in the USA, it has to pay 35% of the profits in taxes to Washington. If that car is made in Korea or Japan, the tax rate is much lower. When the car gets sold in the USA, only a very small portion of the profits are taxed. If Ford manufactures a car here in the USA, it has to pay high costs for electricity because of all the restrictions put in place to limit the burning of coal. The same car made in China pays comparatively low electricity rates for the power generated from hundreds of coal fired plants. If Ford manufactures a car in the USA, it has to pay for all manner of employee benefits required by the government. If the same car is made in Mexico, the workers get very few benefits and the costs are lower. So think about it. Does it surprise you that companies make there products elsewhere? Would you pay more for a car that was made in the USA instead of the identical car made elsewhere if the difference were $4000?
Some of the trade deals may not be good. I still don't understand what is in the Trans-Pacific Partnership which is currently up for approval. It's way too long and too complicated for anyone to really grasp all that is in the bill (and that means that there may be all sorts of items slipped in by special interests.) In general, though, free trade is a good thing. Free trade, however, has to be accompanied by two additional items: first, the government has to make sure that our trading partners do not take steps to give foreign companies and unfair advantage, and second, the government has to end policies that make it impossible for US companies to compete with foreign competitors.
This is a sad number. Just think how many more people would have jobs it America sold as much abroad as it buys from other countries. Or how about if that half trillion dollars was directed instead to American made goods; just think how many millions of people would get jobs from that.
The current push in politics is that the USA made bad trade deals and that accounts for the trade imbalance and the jobs migrating overseas. That's a rather simplistic analysis, however. The truth is that much more important than the trade deals are the policies of the federal government that punish American companies for manufacturing things here in the USA. If Ford manufactures a car in the USA, it has to pay 35% of the profits in taxes to Washington. If that car is made in Korea or Japan, the tax rate is much lower. When the car gets sold in the USA, only a very small portion of the profits are taxed. If Ford manufactures a car here in the USA, it has to pay high costs for electricity because of all the restrictions put in place to limit the burning of coal. The same car made in China pays comparatively low electricity rates for the power generated from hundreds of coal fired plants. If Ford manufactures a car in the USA, it has to pay for all manner of employee benefits required by the government. If the same car is made in Mexico, the workers get very few benefits and the costs are lower. So think about it. Does it surprise you that companies make there products elsewhere? Would you pay more for a car that was made in the USA instead of the identical car made elsewhere if the difference were $4000?
Some of the trade deals may not be good. I still don't understand what is in the Trans-Pacific Partnership which is currently up for approval. It's way too long and too complicated for anyone to really grasp all that is in the bill (and that means that there may be all sorts of items slipped in by special interests.) In general, though, free trade is a good thing. Free trade, however, has to be accompanied by two additional items: first, the government has to make sure that our trading partners do not take steps to give foreign companies and unfair advantage, and second, the government has to end policies that make it impossible for US companies to compete with foreign competitors.
No comments:
Post a Comment