FREE TRADE POLICY-FAIR TRADE POLICY?

The trade policies of the United States have been in a downward spiral since the mid-nineties. Seemingly since about that time, every trade agreement our country enters into with another country(s) tends to heavily favor the other side. Not being an economist myself, I’m not educated enough to know what is behind these moves we have taken vis-a-vis trade practices with other countries but, take a look at the trade imbalances that are growing totally out of hand. Along with the screwed up trade practices the U.S. seems to love is yet another currency manipulation by the Fed. As I recall, Ronald Reagan did a similar move by deflating the value of the dollar to disastrous results. Fortunately Congress made the correction in time before it all went to crap. Now with the Fed artificially pumping in another 600 billion in cash, how long until we start to see the negative results? I find it ironic at the same time Bernanke is doing that with our money, the U.S. government is screaming foul at the Chinese for currency manipulation on their side! Interesting, apparently what’s good for the goose isn’t good for the gander!

Again, not being a bona fide expert, I look at the beginning of the fall with NAFTA, GATT, etc. as turning out to not being good for the U.S. With the ensuing collapse of the American economy under Bush, the reliance on China for loans and trade agreements that basically give away the house because of the money deficit situation, the hole keeps getting deeper.

I’m still trying to wrap my head around some of these trade agreements that are so one-sided favoring the trade partner of the U.S. and not the U.S. The warm and fuzzy and feel-good results of negotiated settlements are supposed to be a win-win for both sides. And yet, the U.S. continues coming up on the losing side. Take the trade atmosphere with the U.S. and the Republic of South Korea. It’s amazing the U.S. signed off agreements dating to the early 2000’s that allow South Korea to dump their products on our market and yet we have no “in” to their markets at all! In this case, though I’m not sure, I wonder if there isn’t a military protection involved. But, if that’s the case, end it! The U.S. is not a bottomless source of military protection for the free world. I would love to see the U.S. shut down the bases on the Korean Peninsula and get out. Let China become more involved in the outside policing of that area, if they so choose. The trade balance with South Korea is obscenely out of whack and it needs to end. The same goes for our gross trade imbalances with Germany and many other countries.

I actually agree 100% with of all people Donald Trump on this issue. Trump rightly points out the U.S. has lost respect with the rest of the free world because they see how our country has become so subservient to these other countries. The U.S. continually comes up on the short end of trade negotiations with other trading countries. This country used to be the economic power house of the planet. No more! After many years of giving away everything in trading negotiations we have sunk to the lowest economic position in the world since our colonial days! Trump, who has been forced to buy heavily with China because his former American sources are either gone, farmed out their production to other countries, or simply are not competitive anymore. He is distressed by this because in his words, the product coming from China is grossly inferior to what he used to buy from American manufacturers. Trump believes the American political system is to blame. We have been led by weak-kneed wimps who get their asses whipped every time they try to negotiate an agreement with another country. So that begs the question, why does the U.S. have such an alarming need to trade for product and services from other countries that we should be doing internally?

Here’s what’s been going on. K Street has run the government of the United States for many years now. It’s only been a matter of money and influence to get all of the country’s trade policies screwed up. The lobbyists have controlled the politics in Washington to the point where national policy has been twisted so far out of shape that the result is a country greatly weakened in its ability to still lead on the world platform. You ask how did this happen? Simple. Corporate America is hell-bent on accelerating, past the obscene, profits on the backs of “Main Street” America that it has come to selling out the country to get there. Why do companies pull up stakes in the U.S. to base their business elsewhere? Because “elsewhere” doesn’t have environmental protection regulation, “elsewhere” doesn’t have employment and wage regulation, and “elsewhere” doesn’t have fees(taxes) for doing business in their countries. So, the leaders of Corporate America prevail upon the weak and/or unscrupulous politicians in Congress, the White House, and the Governor’s mansions across America to make the business environment more favorable to the top end of business. In other words, give gigantic tax cuts and tax favors to business but not hold them accountable,thus we have business and manufacturing flight from the U.S. This is how bad it really is. General Electric, coming off a year of record profits, in the billions of dollars, not only did not pay a penny in taxes, but got a tax refund of several hundred thousand dollars! Figure that one out! Here’s the best part though, how much of GE’s consumer electronic and appliance product is manufactured in the U.S.? So, let’s look at this. China and Mexico got rich off of GE’s business. The upper management of GE got huge salaries, bonuses, and stock acquisition options. The communities that one time were home to this type of business lost local tax revenue and most importantly, all the workers were simply turned out onto the streets. Where did America gain in this Corporate situation? Two things have been proven, two facts that are indisputable are that tax cuts for the top income earners don’t work and top income earners do not spend the money saved by these “tax incentives” given to them by the government. How do we fix this?

You start by re-writing the tax laws to close off all loopholes. The laws need to be simple and black and white, no holes and no subjectivity. Second, you hold every entity to the tax level that is written into the new law, no exceptions. Most important, for businesses that really want to grow, that really want to care for a growing work force, that want to be good stewards to the environment, the government grants tax credits that are tied to objectives, such as hiring personnel, growing the business via brick and mortar additions, things that are accountable by the IRS to ensure they are being done before the tax credit is granted. Start up business should have a set of tax laws specific to new business with specific rules for credit like capital expense, equipment depreciation, etc. Again, accountable to the IRS, and if all is proper the credits are given. These new rules will have be favorable enough to get business back that has already left. It’s all about accountability. The Bush tax cuts are a classic example of why you don’t give something no expectation of return. The government gave these top 2% of income earners a 3% break on taxes with the expectation it would be used to expand business. The problem was, it turned out to be a no strings attached gift. These people have never shown any inclination whatsoever to plow that money back into their business. Oh, just in case you were wondering, only one half of one percent of that top 2% are actually business owners. The rest are users, non-business people who happen to earn in excess of $250K a year. So, I must ask again, where is the benefit for the economy of the United States?

Lastly, President Obama has proven to be, so far, a flop as a President. Now, I have said this for a long time, but being a progressive, I stand with him. But, he is making it difficult. First of all, Obama has proved that a person with no executive experience will be in way over his head in the White House. That is eminently clear in this White House. He made some horrible staff selections that did not serve him well in the least. Now that he has floundered so badly on the economic issues, in a panic, he is running from his base that got him into office by moving hard to the right. The republican leadership sees this happening and they are just putting the screws to him even tighter now. He’s in a bad situation and I’m not sure if he can recover. He was walked into a horrible economic mess and has not handled it properly at all. The sad thing is, had he done things better, he would be the hero and a sure winner in 2012. Now even George Soros has questions about him as our leader. This does not bode well for the President.

The quick fix for the President is get Tom Daschle in the White House immediately. Then get Howard Dean back in charge of the DNC as well as the chief message carrier for Obama and the Democrats. Then put together a panel to give guidance on the economy and include Donald Trump for the balls, or backbone if you will, Warren Buffet, Bill Gates, etc. Give this panel free rein to put an economic solution package together that would be heavily weighted to the trade, currency, and tax position of the federal government. I don’t have any other answers, but I believe I have offered a start. I wish the President and the DNC read my blogs! It would simplify things a lot! Haha! Thanks for today’s read and don’t ever forget, “Go Cocks!” They play the hated Clemson Tigers tomorrow and hopefully they will prevail in a huge way. It will make preparing for their re-match with top-ranked Auburn Tigers in the SEC championship game that much easier. Ahhh, the SEC, total football dominance of Division I football in America!
Cam Obert

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: