Some Trade Deficit Facts
May 17, 2011
THE Coalition for a Prosperous America’s site has a concise overview of our trade deficits, their effects on the economy and proposals for what to do about them in this fact sheet. According to the coalition:
We have trade deficits in virtually all sectors, from low tech to high tech to green tech. Agriculture has ceded domestic market share to imports also.
To the extent we create jobs, they are low wage, low benefit jobs. Our loss of manufacturing means that workers move from manufacturing to service jobs for an average 40% pay cut.
The primary problem is our failure to recognize and neutralize foreign state capitalism. The Chinese government owns over 50% of its economy, using currency manipulation, value added taxes, strategic subsidies, indigenous innovation, and other means to maintain trade imbalances.
Japan, Germany, South Korea and others have versions of state-managed capitalism to maintain net exports. Tariffs are a very small part of the issue.
The “Washington Consensus” version of free trade focuses upon lower tariffs. But lower tariffs do not address the many ways state-managed capitalism causes our trade deficit.
Communism was the 20th Century problem. State-managed capitalism is the 21st Century problem. The U.S. has failed to even articulate this problem, even as we lose jobs, wealth and innovation.
We need a national trade and economic strategy designed to produce more of what we consume, balance trade, and neutralize state capitalism.
