The Trade Deficit is the Jobs Deficit and the Jobs Deficit is the Budget Deficit

A very elite club of corporate leaders -- and the politicians that they bought and paid for -- has moved jobs offshore and shifted America's manufacturing economy to a service economy.

The offshoring of American manufacturing separated Americans’ incomes from the production of the goods and services that they consumed. The advent of the high speed Internet made it possible to offshore professional service jobs, such as software engineering, which drove down the returns to a college education and the employment prospects of graduates. In an offshored economy, the profits of corporations are not a measure of the economic welfare of the population. As American incomes stagnated—except for the rich, there has been no real increase in 20 years—the economy was kept going by the growth of consumer debt to take the place of the missing growth in take-home pay. Federal Reserve Chairman Alan Greenspan’s low-interest-rate policy fueled a real estate boom and drove home prices to new highs, permitting Americans to refinance their mortgages and to spend the equity. Anyone could obtain credit cards, and many Americans maxed out several. By the 21st century, the U.S. economy was a Potemkin economy just as the Soviet economy had been. [Paul Craig Roberts, Potemkin America, Infowars.com, February 5, 2011]

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street. [America Without a Middle Class, devoish's CAPS Blog, July 24, 2010]

The federal government has been using a sledgehammer to endlessly pound away on the capacity of small businesses and individuals to create wealth and jobs and opportunities. The business atmosphere in the United States is now so toxic that it is amazing that any small businesses have survived. Most Americans find themselves with no other way to make a living other than to work for someone else. But the big global corporations have discovered that they can make much larger profits by getting rid of American workers and by shipping our jobs overseas, and our politicians are allowing them to get away with it. [Michael Moore Demands Even More Taxes and Government Handouts, The Economic Collapse, March 9, 2011]

In between a storm of “pretend” rhetoric about creating jobs, rebuilding America’s infrastructure, cutting domestic spending, balancing the budget, ending the wars and other blatant lies, President Obama made a joke about TSA pat-downs at the expense of airport travelers everywhere during his State of the Union address. He suggested that high-speed trains wouldn’t include them. In the first sense of this joke, it is not clear if they will really build these trains, but there are already plans laid by Homeland Security to deploy TSA screening, VIPR detection squads and mobile x-ray scanners at bus and train stations, highway checkpoints, sports stadiums and shopping malls—all in spite of public outcry over invasive “pat-downs” and excessive security checks. The other part of the joke revolves around the background humor of the context of his comments. Like the fact that more jobs than you think will be created through TSA hiring and other security contracting, since manufacturing and other labor has been offshored under globalization while de-industrialization-by-design at home further destroys our economic foundation. Increasingly corporatized public education will sell our children out, not lift them up. [Aaron Dykes, Obama Mocks Airport Pat-Downs as Police State Economy Cripples Nation, Infowars, January 26, 2011]

There are more government employees now than all those employed in manufacturing and construction. How is it that state employees now make 40% more than the average income in non-governmental jobs? What a perversion of government. It is no wonder that the US poverty rate is higher than in Mexico and Turkey." [Bob Chapman, Fairy Tales of Recovery, Reality of More Failures, The International Forecaster, September 3, 2009]

A half century ago, industrial jobs at car and steel plants provided high salaries and rich benefits. But as manufacturing moved overseas, many formerly well-paid workers had to take lower-paying jobs. By the end of the Great Recession, the economic order was undeniably changed. It's the government sector worker who's the new elite, the highest-paid worker on the block. For instance, most non-uniformed public employees who have worked in New Jersey for 30 years with an ending salary of $85,000 can look forward to retiring at 55 with an annual pension of about $46,000. Working until age 60 and a salary of $90,000 can bring a public pension of $57,000. And many of the New Jersey's public-sector retirees have no or low premiums for their health insurance. [Pension Envy: Anger Brews Over Government Workers' Benefits, Associated Press, March 8, 2011]

Beginning in the mid-1990s until about 2005, China exported price deflation into the United States as the country’s 1.3 billion people were gradually integrated into the world workforce. In 2000, the United States imported $100 billion of goods from China, increasing to $365 billion in 2010. During this time, multinational companies in search of the lower costs transferred hundreds of thousands of manufacturing jobs from the United States into China. Many accused Wal-mart of instigating the exportation of 200,000 US jobs. This phenomenon began reversing in late 2007 as all the juice had been squeezed out of lower prices. [A Crack in the Great Wall-mart: Watch Out for Rising Prices from China, Gold Shark, April 7, 2011]

Due to China’s furious growth, the country is expected to surpass the United States as the world’s largest economy by 2030. China outpaced the United States in manufacturing this year. In 2009, the U.S. created 19.9 per cent of world manufacturing output, compared with 18.6 per cent for China, with the US staying ahead despite a steep fall in factory production due to the global recession. The G20 is dedicated to transforming the IMF into a globalist version of the Federal Reserve. The authoritarian slave labor nation of China plays an instrumental role in this proposed transformation. During recent G20 meetings, China worked closely with the United Nations to replace the dollar as the world’s reserve currency. China’s central bank insists the dollar’s global role allowed the U.S. to borrow cheaply abroad, fueling the credit boom that led to the financial crisis. “A new world order is emerging,” declared former British Prime Minister Gordon Brown at the conclusion of the London G20 summit. Brown later characterized the globalist takeover scheme as the emergence of “one global progressive family.” [G20 Pushes Globalist SDR and China’s Role, Infowars.com, February 15, 2011]

American is bleeding jobs at a rate of millions, and its crumbling manufacturing base is being replaced by the endless import of cheap slave goods from the Communist state -- the stunted U.S. economy is being rapidly outpaced by the Red Dragon. Everyone is painfully aware of the fact that China now owns the United States economically, with the Chinese central bank being the largest debt holder at approaching $1 trillion dollars. The average American family with two children collectively owes around $12,000 dollars to China. The Communist state’s ownership of long term U.S. Treasury Securities means the United States pays upwards of $100 million dollars a day to China in terms of interest alone. China’s huge accumulation of U.S. dollars gives it the sway to lead the United States by the nose like a sheep to slaughter, holding in its hands the power to decide the economic destiny of the now collapsing American empire. The culmination of this process moved a step closer when Hu Jintao made it clear that China was preparing to sharpen the knife for the bloodletting to begin, by deriding the dollar as a “product of the past” and signaling its replacement with a new global monetary system based around the Chinese yuan. [Meet the New Boss: China Owns the United States, Infowars.com , January 19, 2011]

The Deficit America Has Forgotten -- and is Eviscerating the Middle Class

April 14, 2011

Campaign for America's Future - We can service each other till the cows come home but if we don't start making more things here and selling them there more and more jobs will be lost, more and more communities devastated and our standard of living will continue to drop. Everyone is focused on the budget deficit. But here's the thing: the trade deficit is the jobs deficit and the jobs deficit is the budget deficit.

The Trade Deficit

Before "The Reagan Revolution" America made things and sold them to the rest of the world. Since Reagan America borrows money to buy things made somewhere else. The trade deficit last month was above forecasts, and a big jump from last year:

The U.S. trade deficit with China widened to $18.8 billion in compared with $16.5 billion in the same month last year. The government also revised the deficit in January to $47 billion from $46.3 billion.

The February monthly trade deficit fell, but only because the decline in exports was less than the decline in imports.

The Big Change

In the early 80's conservative trade policies designed to pit American workers against low-paid, exploited workers in non-democratic countries transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then:

Democracy vs Thugocracy

America is supposed to be a democracy of We, the People. Democracies set up protections for their people that protect wages, rights, safety, dignity and the environment. Conservative "free trade" agreement allow companies to get around the borders of our democracy, pitting their employees against the exploited people living under thugocracies with few or no protections at all. This has created a "race to the bottom" for our wages and benefits. Of course our workers cannot compete against workers who are not able to fight for better pay and benefits. This is the reason we fought to build and preserve our democracy.

China

Instead of fixing our trade problems, we have gone back to the same old same old. Especially vis-a-vis China.

Alliance for American Manufacturing Statement on Latest Monthly Trade Figures

The monthly U.S. international trade deficit in goods and services was $45.8 billion in February. The goods trade deficit with China was $18.8 billion.

--Year over year, the 2011 trade deficit is running far higher than 2010. January-February 2010 clocked in at $74.3 billion, while the first two months of 2011 have already reached $92.7 billion.

--Year over year, the goods trade deficit with China is also running ahead of 2010. January-February 2010 totaled $34.8 billion, while the first two months of 2011 have already reached $42.1 billion.

--Of particular note is that China ($18.8 billion) now accounts for 70% of our overall monthly non-oil goods deficit ($27.0 billion).

Said Scott Paul, Executive Director of the Alliance for American Manufacturing (AAM):
“Washington has focused a lot on budget deficits this year, but scant attention has been paid to the trade deficit. That must change. The trade deficit serves as a drag on GDP growth and requires financing, just like any other debt. While only 9.5% of our national debt is financed by China, that nation is responsible for fully 70% of our trade deficit in non-oil goods.”

China, China, China

Over and over our trade relationship with China demonstrates so many things we are doing wrong in the world competition. Among so many other problems:

- We let them manipulate their currency rate which means their goods have a cost advantage of as much as 40% going out the gate, before other factors come into account.

- Their government subsidizes and promotes key industries. We don't have an industrial policy.

- Their workers are not free to organize and push for better wages, benefits and working conditions. (Ours aren't either, but are more able than theirs.)

- They restrict and otherwise discourage imports

- They follow "Buy China" policies, we do not have "Buy America" policies

- Etc., etc., etc.

The Trade Deficit Is The Jobs Deficit

Our trade deficit is our jobs deficit. When you close the factory we can't make a living. When you move the hobs over there the jobs aren't here.

American Prospect, The Plight of American Manufacturing,

Since 2001, the country has lost 42,400 factories, including 36 percent of factories that employ more than 1,000 workers (which declined from 1,479 to 947), and 38 percent of factories that employ between 500 and 999 employees (from 3,198 to 1,972). An additional 90,000 manufacturing companies are now at risk of going out of business.

Giant Sucking Sound

So we closed our factories (trade deficit) and shipped the jobs to other countries (jobs deficit) where they pay less and don't protect the environment. Again, from The Plight of American Manufacturing,

Long before the banking collapse of 2008, such important U.S. industries as machine tools, consumer electronics, auto parts, appliances, furniture, telecommunications equipment, and many others that had once dominated the global marketplace suffered their own economic collapse. Manufacturing employment dropped to 11.7 million in October 2009, a loss of 5.5 million or 32 percent of all manufacturing jobs since October 2000. The last time fewer than 12 million people worked in the manufacturing sector was in 1941. In October 2009, more people were officially unemployed (15.7 million) than were working in manufacturing.

Millions and millions of good-paying jobs. Gone.

The Jobs Deficit IS The Budget Deficit

People with jobs pay taxes. People with jobs don't collect unemployment benefits. A huge component of our budget deficit is the result of unemployment, much of it caused by the trade deficit.

Of course there is the core component of the budget deficit that was caused by tax cuts for the wealthy, the huge increase in the military budget and the interest on the borrow for these. But the big increase since the financial crisis is due to the recession and restoring our manufacturing base addresses much of this. People with good manufacturing jobs pay mortgages and buy houses and cars and shop at stores and make the economy work. And when thrry buy things made in America the money stays in America.

What We Can Do

This is from a year ago -- yes, a year, with nothing done: It Is Time To Put Our Foot Down: Ten Steps We Can Take To Stop Closing Factories And Eliminating Jobs,

Here are just some steps that We, the People can take to start turning this around:

- A border tariff on imports to remove the price advantage of goods produced by exploited, underpaid workers.

- A border tariff to remove the price advantage of goods produced in ways that harm the environment.

- A border tariff on goods from countries that are not democracies, to remove any pricing advantage gained from not allowing people to vote and set rules that benefit themselves.

- A border tariff on goods from countries that restrict workers from organizing to improve their wages and working conditions, to remove any pricing advantage gained from not allowing workers to bargain. (America currently doesn't meet this standard.)

- Remove tax benefits and instead impose tax penalties and fines on companies that close factories here. Don't let it be profitable to do this!

- Increase taxes on the big monopolistic companies to remove the advantages that help them destroy America's smaller, regional and local businesses -- the very job creators we need.

- Increase income taxes on high incomes to reduce the incentive to pursue short-term windfalls instead of long-term interests. Make it take a long time to accumulate a fortune. Making a fortune is great but it should be a reward for helping our economy and society, not destroying them.

- Break up the "too big to fail" Wall Street firms that wrecked the economy. And get the money back -- all of it.

- Explore the use of Eminent Domain to keep factories in communities and workers in the factories.

- Formulate and follow a national economic/industrial strategy to build a new green manufacturing economy