Main Discussion
You can help reduce the U.S. trade deficit that is currently about $2 Billion per day. This deficit is financed by foreign purchases of U.S. bonds, real estate, and other American assets. Wake Up America! Every foreign product we purchase not only adds to that deficit, but also sends jobs and skills overseas as well.
Any reporting on the loss of jobs always fails to mention the exponential loss of skills that is occurring and this will be the most difficult to recover from. Highly skilled labor requires formal training and 3 to 10 years of "On the Job Training" to become proficient. This job training assumes there are experienced employees to guide newer employees to proficiency. Individual Highly Skilled jobs are difficult to replace thus Industries that are lost then become extremely difficult to replace.
1971 was the first year that the U.S. experienced a trade deficit and that deficit continues to grow dramatically as Graph 1 shows.
Graph 1
Not coincidently, the number of jobs that make up the foundation of a strong nation have also declined as Graph 2 shows.
"Manufacturing is the backbone of our economy and the muscle behind our national security."
- Donald L. Evans, Secretary of Commerce
"The U.S. is the most open automotive market in the world. Japan and Korea, are the most closed. High customs duties and taxes on U.S. made imports, can triple the cost of a Ford in some foreign markets."
- Ziad Ojakli Ford V.P. -- Corporate Affairs
Graph 2
It is important to consider what is behind any product purchase:
- Nationality of Company: Receives profits and makes decisions first for the benefit of their company and second for their country
- Employment of Highly Skilled Labor (management, design and manufacturing...): Loss of these employees will take many years to replace
- Employment of Low Skilled Labor (assembly line workers, operators and laborers...): Labor that can be replaced quickly
Even if a foreign owned company assembles its product in the U.S., the majority of Management and Highly Skilled labor remain overseas. The profits also go overseas. It is only the Low Skilled labor and a small percentage of Highly Skilled labor that is transferred to the U.S. and a major reason is to avoid U.S. tariffs on imports entering the country.
US companies are cost disadvantaged on several accounts. Some are listed below:
- U.S. companies bear the burden of employee health insurance.
- Ford and GM state that $1000 to $1200 of each vehicle is due to health care costs
- Japan and Europe health care is covered by the government
- Many U.S. companies that have been in business for many years have a high cost to support their retirees.
- If a U.S. company goes out of business and cannot fund it's pension plan, which is very possible, taxpayers assume responsibility for the plan through Pension Benefit Guaranty Corp (PBGC established by the Employment Retirement Income Act of 1974).
- U.S. companies follow much stricter environmental, safety and labor policies than most countries.
- Many countries do not follow FREE TRADE as the U.S. does.
- The United States is the most open market in the world. Many foreign governments impose "tariff" and "non-tariff" barriers to limit foreign competition. While they're not taxes, non-tariff barriers include investment restrictions, local supplier sourcing rules, import quotas and licensing, and burdensome customs procedures.
- A strong U.S. dollar makes imported products less expensive in America and American exports expensive for the rest of the world.
- Countries like Japan and China deliberately keep their currencies cheap compared to the dollar. This makes products imported from Japan and China (priced in yen and yuan) cost less than goods exported from America (priced in U.S. dollars).
- All or most foreign tax structures are set up to rebate taxes on exported goods to encourage exports. The U.S. does not have this tax structure. (Wilbur Ross; Wards AutoWorld, June 2006)
A March 25th 2007 article in Parade by Lyric Wallwork Winik, titled "Europe: "No" to foreign cars, states Americans have embraced Japanese cars to the point where U.S. automakers like Ford and General Motors are fighting for their lives. Not the Europeans. Most show great loyalty to their own nationalities when it comes to buying a new set of wheels. In Germany, the 10 best-selling cars are all German. In France, nine of the top ten are French-made. Three of the five most-popular cars in Italy are made by Fiat, an Italian firm. And in Sweden, Volvos and Saabs account for the four best-selling vehicles."
EVERY foreign product we purchase directly sends money and jobs overseas. This also transfers our standard of living to those countries, which may be acceptable for developing countries, but the deficit needs to balance out for developed countries. American personal debt is at an all time high as a result of trying to maintain the same standard of living while the actual standard decreases! Personal bankruptcies reached an all-time high of 1.8 million households in 2006. US consumer debt has topped $2 trillion for the first time ever and has doubled in the last 10 years.
Some argue that foreign companies use U.S. profits to reinvest back into the U.S. The fact is that foreign companies will reinvest their money in whichever business plan shows the highest potential profit. Their decision may be to buy American securities, buildings, and businesses or to invest overseas if the American economy or dollar becomes unattractive. It's in our country's best interest that Americans have the money to decide which business plan to invest in. The growing U.S. trade and budget deficits and loss of jobs will weaken the U.S. economy and strengthen other economies eventually making investment overseas more attractive.
The Institute for International Economics points out that America's constantly rising deficit in global transactions has created a co-dependent relationship between the U.S. and it's trading partners. This partnership provides trading partners access to more consumers and allows the U.S. greater consumption. Unfortunately, most imports are purchased on credit from its foreign trading partners. While members of the IIE are divided on the degree of "crisis," they will at least agree the U.S. is caught in a gradual deterioration and that the growing debt is unsustainable. Interest income that once went to lenders within the U.S. now goes to overseas lenders. Foreigners own a rapidly growing percentage of U.S. Treasuries purchased with dollars Americans pay for imports, effectively lending back to Americans for more foreign purchases. This money finds its way to the public through deficit spending and the cycle of purchasing on credit continues. The Institute for International Economics discusses this subject in great detail in the reference link below.
Thank you for your consideration and support. Please feel free to contact us at contact@support-usa.com with your comments.
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