A Bold Action Plan for US Jobs Recovery!

There's much hand-wringing about unemployment, but few proposals for potent action, Most call for more stimulus spending on infrastructure and easier credit for small business. But there's growing concern about adding to projected budget deficits, especially with the limited results so far. We need to make something very big happen that's within our control and still is affordable

Also, our leaders haven't recognized a more basic problem than spending. It's the loss of our ability to compete with foreign imports here' in our home market. For example, there's hope that green products" like wind turbines will be a fine opportunity for US companies and with many new jobs. Yet suppliers from Europe and even Brazil have already taken the lead there. Since the recession began, thousands of US manufacturers have given up and closed shop. No wonder job recovery is slow with those employers gone.

Is the situation hopeless? No, not at all if we rebuild our global competitive position wisely. We should start where we have the most strength -- possession of the world's biggest market by far. Remember this -- America is the only industrial nation that runs trade deficits. In the past 4 years, 2004 through 2008, we had a total trade deficit of 3.5 trillion dollars! We had to borrow 2 billion dollars a day to pay for it! That's national insanity, plain and simple! Imagine what we could do with that money to rebuild our industries and for other programs lime health care and education. There's no national strategy or WTO regulation that says we should borrow.

To support the rest of the world's exports, we must have at least balanced trade, and there's draft legislation already written to achieve it -- Senate, bill S.3899 -- "The Balanced Trade Restoration Bill of 2006". But it's not even being discussed in Washington today. The bill is based on a plan devised by Warren Buffett and calls for the issuance of tradable "import certificates"equal to our exports. It's market-based and doesn't target any country or industry. Imports are still welcome, but the purchase of the necessary import certificates will level the competitive playing field, especially with countries ,like China, Japan,and Germany that heavily subsidize their exports. A very important feature is that little government funding will be required, and businesses should have a much better chance at easier credit with better market conditions.

It's time for the Obama Administration to make jobs a much higher priority and to strongly back
S 3899 as one of the main answers. We can do this unilaterally and it should have wide bipartisan support.

 

Comments

[bwenston42]

Realization, there is nothing you have written that I disagree with. We can bring jobs back into this country by just penalizing corporation who close plants and off shore their production and that would be that. But. In my view corporation off shore their production for two main reasons. One, so they don’t have too abided buy environmental regulations. Two, to get their profits margins high enough to pay the ridiculous return on investment that Wall Street requires. Maybe there is someway that those two concerns could be addressed.

[Realization]

You have hit on the big problem but I suspect the solution is wrong.

Other countries that are being successful don't even discuss the idea that it is ok to run trade deficits. They know that national power and prosperity comes from manufacturing and aim at obtaining tech, knowhow, and creating a trade surplus.

They also have industrial policies and use protectionism so that the domestic market will be a secure base for exports and to provide profits for their firms to expand internationally.

It is really only the U.S. among advanced countries that is open.

We have to decide to eliminate the trade deficit and rejuvenate American manufacturing and tech. That requires trade policy that eliminates advantages for the competition, getting exchange rates right, eliminating advantages for foreigners in FDI (if our firms have to "pay to play" by manufacturing or transferring tech in a jv, so should theirs), etc. Whatever it takes.

And we have to do it while we still have some leverage.

It would have been easy in the late '70s when we had Section 301. But we never used it and allowed the competition to play for time without ever really opening markets.

Harder now but it requires lots of changes, like raising the marginal tax rate so that profits go to expanding companies for the long term instead of lining executive pockets.

And we have to stop states from happily subsidizing foreign companies so we can be "divided and conquered".

[Indon]

I do have one concern about the proposal:

What in the bill prevents a company from, say, "playing catch" with itself to bring in unlimited imports?

Allow me to explain.

We have company X with overseas subsidiary Y. X exports essentially worthless widgets, marked up 100000%, to Y, which accumulates huge import vouchers for X, allowing them to grab whatever. X would mark a loss, but they include Y's profits on the books, so they break even.