The economy is in a period of slow growth -- 1% to 3% a year. But offshore the markets are experiencing two to three times that rate. In the Harvard Business Review for October 2009, Jeffrey Immelt, the CEO of General Electric, said "reverse innovation" is needed for global growth. Accordingly, GE has moved its research, development, production and management techniques offshore. GE now has more than a dozen growth teams in China and India.
The Harvard article is headlined "How GE Is Disrupting Itself." The article has Immelt responding to an Indian team manager concerned with a U.S. problem: "I don't even want to talk to you about your growth plans for the United States. You've got to triple the size of your Indian business in the next three years... " Immelt has just been appointed job czar by President Barack Obama to develop jobs in the United States. After his appointment, Immelt announced a $550 million research center for GE in Brazil. Jeffrey Immelt's mind is still concentrated offshore.
Over the weekend, President Obama on the campaign trail said: "You should know that keeping the economy growing and making sure jobs are available is the first thing I think about when I wake up every morning. It's the last thing I think about when I go to bed each night." Pretty words -- but President Obama is the reason we don't have jobs. Only the president can enforce the trade laws, and President Obama avoids enforcement like the plague. Enforcement would limit offshore profits, which would limit campaign contributions, which would ruin Obama's drive to raise $1 billion in campaign contributions.
Then I heard Donald Trump on the campaign trail say: "China is the enemy." China is not the enemy. China is developing a strong economy with controlled trade like the United States did in the early days. We didn't pass the income tax until 1913. For the first hundred years we financed and built these United States with trade tariffs, causing Edmund Morris to report in Theodore Rex: "This first year of the new century found her [U.S.] worth $25 billion more than her nearest rival, Great Britain, with a gross national product more than twice that of Germany and Russia." President Theodore Roosevelt exclaimed: "Thank God, I'm not a free trader." China uses every twist and turn in the trade laws to develop its economy. The United States doesn't call China on it because this would limit corporate profits which would limit campaign contributions. Both the president and Trump are as confused as Hogan's goat. Like Pogo, we've met the enemy, and it is us.
Twenty years ago I called my friend Walter who was developing an industry in California, and I said: "Walter, I see your stock is doing good. The next expansion -- we want it in South Carolina." Walter replied:
I don't produce anything in-country. It's all in China. You lease the plant on a year-to-year basis. China furnishes the labor. I send a young manager to watch production. I don't have any labor, health, safety or environmental worries. If it works out, I don't have to pay any tax; I lease another plant. If it doesn't work out, I walk away and have no legacy cost. I can keep up every day on the internet and have time to play a round of golf.
This is the real world. It doesn't pay to produce in the United States. We're getting rid of production and jobs as fast as we can. We're in a trade war and disarming.
Globalization is nothing more than a trade war with production looking for a country cheaper to produce. Every country, except the United States, is competing in globalization for jobs. Today the nation needs to attract investment and industry to rebuild our economy. The president and Congress must act like Southern governors. We can do this by changing our tax laws and enforcing our trade laws.
The worldwide value-added tax of 136 countries applying a VAT averages 15%, which is rebated on export. We can make it pay to produce in the United States if President Obama called on Congress to replace the corporate income tax with a 5% VAT. This cuts taxes and eliminates "the highest business tax in the world." It reduces the price of family needs. It eliminates the disadvantage to U. S. exports ($180 billion) and export subsidies to import competition ($270 billion). A $450 billion total disadvantage to trade is eliminated. With revenues of $600 billion from a 5% VAT instead of $156.7 billion from the corporate income tax, exemptions for the low income still leaves $350 billion to pay down the debt. Now corporate America can invest a trillion dollars from the offshore profits to produce jobs in the United States.
But my friends in Congress tell me they are not about to introduce such a measure without the president's approval. And President Obama doesn't want to disturb corporate contributions. If President Obama would govern instead of campaigning and enforce the War Production Act of 1950 like President Kennedy did for the textile industry, it would create millions of jobs. It's not necessary to enforce the law for all textiles, but the nation must have on hand parachutes, camouflage, body armor, etc. If President Obama would impose a 10% surcharge on imports like President Nixon did in 1971 when our trade deficit was miniscule compared to what it is today, it would create millions of jobs. If the president would enforce our trade laws like President Reagan did for steel, automobiles, computers, machine tools, and motorcycles, it would create millions of jobs.
President Obama needs to get the country out of the Iraq, Afghanistan, and Libya wars and get into the trade war. The nation is in a desperate condition. To signal campaigning for the rest of this year and next year for a billion dollars is obscene. President Obama needs to lead the country in the trade war. Appointing Jeffrey Immelt is just campaigning.
And the Value Added Tax (VAT) is a great idea, Senator. Keep saying it. Every prosperous industrialized country on the planet has one. more info: http://completelybaked.blogspot.com/search/label/VAT
For readers here who haven't seen it yet, there is a great body of work here at HuffPo by Ian Fletcher on the failures of free trade: http://www.huffingtonpost.com/ian-fletcher
We cannot be civil to one another for five minutes, let alone agree on anything. I even feel myself angry when I watch the news and read the paper. It makes me very sad. I only have distaste for both parties. I vote for the lesser of evils, but that's harder every election.
http://www.gp.org/
We cannot win a trade war with economies like China and India. The American South dominated the cotton industry for the 18th century (and first half of the 19th). Slave-labor is economically efficient. If we choose to meet that standard, we would be choosing a slave's existence.
There is no choice.
So in this I agree with Trump. China needs to be seen as the enemy. And it may just take a war to wake people up. I have a feeling that this same play has been staged and for the same reasons; entrenched power seeks to enslave its people via globalizatÂion and war is the only way to stop it.
must be kept anemic.
How else can they supply the endless need for poor and middle class involuntary recruits to volunteer to join the military
If they can't pay for college and can't find meaningful work they will keep signing up.
As always the rich kids won't have to bother with such an inconvenience.
Money continues to go to feed this monster rather than into the domestic economy
which keeps this cycle going.
The U. S. Military is as large as all others in the world combined, yet we cannot protect
our own borders, find the time to declare a necessary war or even succesfully fight one.
We are pretending to not be capable of developing green renewable energy because the
fossil fuel energy companies have too much influence over our lawmakers.
The Healthcare industry keeps our ability to care for all our citizens completely out of reach.
The financial institutions have completly eliminated illigal organized crime simply by seeing
that all it's aspects have been made legal. They can pillage us at will with no reprocusions.
There is some sort of payday loan company on nearly every corner.
I have experienced my fixed income Social Security income buying power cut in half in the
last 3 years while the government claims there has been no inflation. This is simply a big
bold lie.
These are the real reasons we don't have a balanced budget.
Thanks.
Misbah Mumtaz
We should hope that US' growth rate returns to a healthy range (eg, 5% or higher per year), but it isn't hard to see why poorer/developing countries are registering higher growth rates than developed ones: since the former countries are presently underdeveloped (or were so in the recent past), the need for development itself creates prospect for economic growth. As those countries try to lift themselves out of poverty via development, their economies expand and show robust growth rates.
The dynamic is different in already developed/industrialized countries, wherein a steady flow of new technological and other innovations and breakthroughs is needed in order to expand the product base, consumer demand and markets, and thus power economic growth rates that are higher than stagnation growth rates. And that takes innovation among other things.
(Continued)
However, those economic growth rates for developing countries can be misleading unless one looks at per-capita GDPs (related to incomes).
In 2010, US' per-capita nominal GDP (IMF numbers) was $47,132, whereas that for India was $1,176 (one of lowest in the world). In other words, an average Indian person made about 1/40th of what an average American did. The situation is numerically comparable to someone (person A) making $25K per year (equivalent to making at a clip of $12 per hour) vs someone (person B) earning $1 million per annum. If A's income grows by 10% and B's only by 3%, should B be envying A's income growth? Of course not, as, even after that growth, A would still be making only $27.5K ($2.5K more than before), while B would be making $1,030,000 (a $30K increment.)
If India's economy grows at 8% per annum and the US economy doesn't grow at all (to assume a worst case situation for the sake of argument), then it would take 48 years for India's per-capita to catch up with US'. If the US grows at a rate of 4%, then it would take India a whopping 98 years of sustained 8% growth (and assuming sustained high growth rates over such a long time horizon isn't even realistic) before an average Indian person would earn the same as an American. And that's how starkly poor India really is compared to America, recent economic growth rates notwithstanding.
Since the rich and developed parts of world currently have somewhat stagnated economies (with Germany being a notable exception), plugging into the faster growing developing countries through balanced trading helps prime richer countries to a faster economic growth rate than they otherwise would have.
As I have pointed out below, the US and India have a small and relatively balanced trade relationship in both goods and services:
http://www.huffingtonpost.com/social/deCruz/just-campaigning_b_846630_83750669.html
unlike the situation with China: a staggering $273 billion goods trade deficit with China last year.
A key distinction between China and India, as has been observed by economists, is the following: while China's growth is based on an exports-based model, India's growth is primarily powered by internal expansion.
Then, what's the solution, the ballot box? No chance, elections in the US are bought. Then what's the solution?