Historians tell us that by the very end of the Roman Empire, goods were pouring into Rome from all over the known world, but about the only thing being sent out of Rome was human waste and garbage. America has not yet reached that point, but we are certainly well on our way. In 2010, the number one U.S. export to China is “scrap and trash”. Yes, you read the correctly. The number one thing that China buys from us is our garbage. According to author Clyde Prestowitz, China’s number one export to the U.S. is computer equipment (nearly $50 billion) while our number one export to them is waste paper and scrap metal (approximately $8 billion). When it comes to world trade, China is literally wiping the floor with the United States. In August, the U.S. trade deficit with China set a new one month record of $28 billion dollars. Our insane trade policies are making China (along with several of our other “trade partners”) incredibly wealthy, and the U.S. government ends up begging China to lend that money back to us to fund the exploding U.S. national debt. That just isn’t stupidity – that is insanity.
The truth is that our “twin deficits” are literally bankrupting this nation. We are completely and totally destroying the economic future of our children and grandchildren.
But hey, the Vikings beat the Cowboys, Dancing With The Stars is heating up and we all have a bunch of DVDs to get caught up on so why worry ourselves, right?
Unfortunately, the reality is that we can’t afford to be “comfortably numb” any longer if we hope to have any kind of a future.
It is time to wake up people.
Sadly, a significant percentage of young Americans these days can’t even tell you what a “trade deficit” is.
If you don’t believe this, just try a little experiment some time. Just go up to a few young Americans on the street and ask them to define “trade deficit” for you.
But fortunately, the vast majority of the readers of this column are quite informed. Unfortunately, I still don’t believe that most of you really understand how incredibly dangerous the trade deficit is.
So just how dangerous is the trade deficit? Well, world famous investor Warren Buffett once put it this way….
“The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil… Right now, the rest of the world owns $3 trillion more of us than we own of them.”
Between 2000 and 2009, America’s trade deficit with China skyrocketed nearly 300 percent. Wealth, factories and jobs are leaving the United States at an astounding pace. The danger that this represents to our economy is so vast that it is hard to even describe.
If you ever find yourself in a debate with proponents of “free trade”, you can almost always get them to eventually admit that “free trade” will raise the standard of living for workers in countries like China while significantly lowering the standard of living for U.S. workers, but that this must be done for the good of the emerging “global economy”.
Of course U.S politicians never really mention this nasty little fact when they give speeches about how wonderful our trade policies are. They never really get around to mentioning that “free trade” is one of the key foundations of “globalism” and that we are being merged into a one world economy.
Today, American workers do not just compete with other American workers. Instead, U.S. workers now find themselves in direct competition for jobs with workers in China that makes less than a tenth of what an American worker would make. In China, a garment worker makes approximately 86 cents an hour. Apple iPhones are manufactured in China by workers making about 293 dollars a month (and that was after a big raise).
So exactly how long do you think you and your family would be able to survive on 293 dollars a month?
But unfortunately, millions more Americans will lose their jobs and millions more Americans will be forced to take a cut in pay in order to compete in the new global economy.
According to a disturbing new study by the Economic Policy Institute, if the trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
The sad truth is that it is NOT a good time to be a blue collar worker in America. If your job does not get offshored or outsourced, then it is likely to be made obsolete by computers and automation.
The need for manual labor is rapidly declining in today’s world. For example, there is a Japanese firm called Fanuc, Ltd. that actually has industrial robots manufacturing other industrial robots in a “lights out” factory.
How bizarre is that?
But things wouldn’t be quite as bad for U.S. workers if China was not cheating so badly. The truth is that they just do not play the game fairly.
For instance, it is estimated that the Chinese government is keeping China’s currency valued about 40 percent lower than it should be. This is essentially a de facto subsidy to China’s exporters.
There has been a little bit of rumbling in the Obama administration about this in recent weeks, but it is quite unlikely that they will push China too far on this issue. After all, the Obama administration desperately needs China to keep loaning us massive quantities of money so that we can keep funding our runaway debt.
If you sit back and objectively analyze the facts, it quickly becomes undeniable that China is beating the living crap out of us economically. In fact, one prominent economist is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.
This all could have been turned around a decade or two ago, but now China has us by the throat. At any time, China could decide to start selling off massive quantities of U.S. Treasuries. At any time, China could decide to cut off our supply of rare earth elements (of which they have a virtual monopoly).
China is now even the number one supplier of components that are critical to the operation of U.S. defense systems. How smart were we to allow that to happen?
It is a direct threat to national security for China to have so much leverage over us. But you rarely hear anyone talking about this.
The truth is that trade with China is not a left/right issue. As I have written about previously, it is impossible for any self-respecting conservative to justify our trade policies with China and it is impossible for any self-respecting liberal to justify our trade policies with China.
Yet very few current members of the U.S. Congress ever discuss the possibility of sweeping changes to our trade policies.
So we will continue to lose thousands of factories, we will continue to lose millions of jobs and we will continue to see the biggest transfer of wealth in the history of the world accelerate.
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