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Today's
Stories
January 9,
2008
Cockburn /
St. Clair
The
Empire Strikes Back
Alan Farago
As Florida Sinks: the View from the Titanic
January 8,
2008
Paul Craig
Roberts
No
Jobs for the New Economy (or the Old)
Russell Mokhiber
The Black Hillary: Obama is Just Another Political Sedative
Robert Fantina
The Gulf of Tonkin and the Strait of Hormuz
Dave Zirin
Butts on Parade
Shamako Nobel
I Am an Emcee: the Politics of Hip Hop
John Ross
Zapatista Women Encounter Themselves
Brenda Norrell
Apaches Defend Homeland from Homeland Security
Laura Carlsen
Why Bolivia Matters
Patrick Irelan
Remember the Maine!
Evelyn J. Pringle
The Holes in Bush's FDA
Jonathan M.
Feldman
After Iowa and New Hampshire: a Strategy for Rebuilding the Peace
Movement
Michael Dickinson
Playing Soldier
Website of
the Day
Sean Hannity on the Run!
January 7,
2008
Chris Floyd
There
Will Be Blood: But No Justice for Iraq Atrocities
John Blair
Remove That Man! Creeping Fascism in Indiana
Uri Avnery
The Case of the White Bird
Andy Worthington
Who Are the Gitmo Saudis?
Binoy Kampmark
Needling the Convict: Lethal Injection and the Supreme Court
David Macaray
Women on Strike
Ralph Nader
Obamarama: the Politics of the Smooth Mood
Michael Donnelly
It's the War Vote(s), Stupid!
Ron Jacobs
Ron Paul's Run: Is Being Against the War Enough?
Gideon Levy
The Hostile President
Dave Lindorff
A Real 9/11 Cover-Up? Sibel Edmonds, Turkey and the Bomb
Website of
the Day
Plagues and Pleasures on the Salton Sea
January 5 /
6, 2008
Douglas Valentine
Good
Guys in Black Hoods
Kevin Young
The
US Occupation and Popular Opinion in Iraq
Richard Rhames
Saddam
Who?
Saul Landau
Bush Snatches Defeat from Victory
Marc Lynch
Why Bush's Iran Strategy is Failing
Robert Fantina
Iowa, Democrats and the Iraq War
Donna Volatile
Antiwar Soldier: an Interview with Jonathan Hutto, Sr.
Jelle Bruinsma
Norman Finkelstein in The Netherlands
Bob Sutcliffe
Remembering Andrew Glyn, Rebel Economist
Harvey Wasserman
Anti-Nuclear Renaissance
Missy Beattie
Why Obama Can't Save Us
David Swanson
Remembering the Separation of Powers
Jacob Hornberger
The Importance of the Padilla Case
Shepherd Bliss
Survival Tools from Kokopelli Farms
Ron Jacobs
Bleeding Kansas
Poets' Basement
Patti Smith, B.R. Gowani and Peter Buknatski
Website of the Weekend
Jimmy Dean Sausage Call Complaint
January 4,
2008
Cockburn /
St. Clair
A
Good Night in Iowa
Jonathan Cook
War Crimes Airbrushed from History
Paul Craig Roberts
Thinking for Yourself is Now a Crime
Stan Goff
Ron Paul's Monkeywrench
Dave Lindorff
Clinton's Iowa Flop Exposes DLC Myths as Frauds
Niranjan Ramakrishnan
To Pindi Station
Allan Nairn
U.S. Elections Over Before They Began
Joshua Frank
The Failures of Sectarianism
Peter Morici
Economy on the Skids
Mary McInnis
Iowa Cocky-Us: How to be a Caucus Tease
Website of the Day
The Return of Obama Girl
January 3,
2008
Fatima Bhutto
Farewell
to Wadi Bua
Pam Martens
The
Free Market Myth Dissolves into Chaos
Joanne Mariner
The Presidential Candidates and Torture
Zoltan Grossman
Remember the '80s: Social Movements Between Woodstock and the
Web
David Domke
The Echoing Press and Huckabee
Norman Solomon
Edwards Reconsidered
Nikolas Kozloff
Return of the Faux Liberal
Jacob G. Hornberger
The Padilla Case and the Future of Habeas Corpus
Martha Rosenberg
Quit Picking on Huckabee's Son, Michael Vick
Russell Means
This Property is Condemned: a Notice to Those Occupying Lakotah
Lands
Website of the Day
WolfQuest
January 2,
2008
Jeff Taylor
The
Left and Ron Paul
M. Shahid Alam
The Life and Death of Benazir Bhutto: a Pakistani Tragedy
Gary Leupp
Madness Compounding Madness: Calls for Intervention in Pakistan
Paul Craig Roberts
Criminals with Badges
Heather Gray
Georgia's Racist Death Penalty
Fred Gardner
and Shobhit Arora
Dr. Strangelove's Nemesis
David Macaray
Labor Unions and Taft-Hartley
Benjamin Dangl
Fear and Loathing in Bolivia
January 1,
2008
Iain A. Boal
City
of Disappearances
B. R. Gowani
Benazir's Death in Crisistan
Shahid Mahmood
Bhutto and the Press
Linn Washington,
Jr.
Old Injustices Endure: From Crack Sentences to Racial Profiling
Harvey Wasserman
Taking Leonard Peltier to Iowa: the Moral Low Point of the Clinton
Era
John Ross
2008, Already a Year to Forget
Website of the Day
The Thrill is Gone: BB and Gladys
December 31,
2007
Alexander Cockburn
Goodbye
2007 and Good Riddance!
Tariq Ali
Pakistan, the Aftermath
Liaquat Ali Khan
The Perfidy of Pakistan's Rulers
Wajahat Ali
After Bhutto, a Nuclear Pakistan?
Robert Fisk
Who Killed Bhutto?
Ajai Sahni
Myths and Realities About Benazir Bhutto and Pakistan's Dark
Future
Marwan Bishara
You Say Talk, I Say Attack: The Middle East and the US Presidential
Election Campaigns
Uri Avnery
The Beilin Syndrome
Mark T. Harris
Does This Happen in Canada?
Brenda Norrell
Resistance and Censorship
Website of the Day
A People United Will Never Be Defeated
December 29
/ 30, 2007
Alexander Cockburn
Options
in America: Kill Yourself or Have a Baby
Tariq Ali
Indignation and Fear Stalk Pakistan
Fawzia Afzal-Khan
My Encounter with Benazir Bhutto
Gary Leupp
The U.S. and Pakistan After 9/11: Blowback from an Unholy Alliance
China Hand
Pakistan Stares Into the Abyss
Jacob Hornberger
Stop Medddling in Pakistan
John Chuckman
Pakistan and the Failure of Quick-Fix Politics
Missy Beattie
Evaluating Bush with the Bhutto Corruption Standard
Ralph Nader
Who Will Take the Next Step?
Fidel Castro
There Hasn't Been a Day in My Life When I Haven't Learned Something
Robert Fantina
The Sham of Homeland Security
Greg Moses
Beauty from the Heart of Texas
Catherine Lutz
What We Can Not See: Art and Bombing
Kristin Van
Tassel
Seeing in the Dark
Kim Nicolini
Redacted: Brian DePalma's Scream of Outrage
Phyllis Pollack
Keith Richards Runs With Rudolph Once More
Poets' Basement
Landau, Gibbons and Davies
Website of
the Weekend
Driving Karachi in Search of the Perfect Naan
December 28,
2007
Farzana Versey
The
Complex Electra
Wajahat Ali
A
Pakistani Requiem
Binoy Kampmark
Death in Rawalpindi: Bhutto and Her Legacy
Ayesha Ijaz
Khan
Not Dead Yet: The Pakistan People's Party Still Survives
Anthony DiMaggio
Turkey's Bombing of Iraq
Ray McGovern
Creeping
Fascism
Jim Goodman
Biofuels, the Biggest Scam Going
Ron Jacobs
Transcending the Colonizer's History: Iran, a People Interrupted
Russell Hoffman
Mini-Nukes by Toshiba
John Murphy
Greens Gone Wild
Website of the Day
Guiliani Campaign Official: "Only Rudy Can Defeat the Muslims"
December 27,
2007
Dilip Hiro
A
Tragedy Foretold: Will Bhutto's Death be a Boost for Her Party?
Murtaza Shibli
Who Killed Bhutto?
Stephen Soldz
Fallujah,
the Information War and U.S. Propaganda
Bill Quigley
Locked
Outside the Gates
Paul Craig Roberts
The Great American Lock-Up
Omer Subhani
Killing Bhutto: What Happens Next in Pakistan?
Marjorie Cohn
The Torture Tape Cover-Up: How High Does It Go?
Allan Nairn
Cataclysm By Money Whim
Jacob G. Hornberger
Smearing Ron Paul: Shame on the NYT
Norman Solomon
Channeling Suze Orman
Patrick Irelan
Rumsfeld Spills the Ink
Ben Tripp
Pass the Razor Blades
Website of the Day
Quagmire, For What It's Worth
December 26, 2007
Charles Tripp
From
One Saddam to Fifty
Paul Armentano
No-Knock, You're Dead
Rannie Amiri
Lebanon in Search of a Government
Stanley Heller
Brzezinski and Charlie Wilson's War
John Walsh
Two Unreasonable Men
Martha Rosenberg
The Strange Career of Scott Gottlieb
Norman Madarasz
Bolivia Amends New Constitution and Faces Mutiny from Within
Website of
the Day
Cockburn at the Battle of Ideas
December 25,
2007
Patrick Cockburn
Conscience
and Empire
December 24,
2007
Andrea Peacock
A
Dark Ride on the Border
Tariq Ali
Thinking of Edward Said
Uri Avnery
Help! A Ceasefire!
Jill Jameson
Burma is Not Back to Normal: A Trip from Rangoon to Mae Sot
Steve Melendez
Russell Means Goes to Washington
Mike Whitney
The Big Fix
Chuck Munson
Not Getting It About New Orleans
John Walsh
Clueless Crusaders
Farzana Versey
Tony Blair and the Hawking of Religion
Richard Neville
Dreaming of a White House Christmas
Website of the Day
Back in the USSR
December 22 / 23, 2007
Alexander Cockburn
Mike
Huckabee's Ascending Chariot
Ralph Nader
Politics
and Profits: How the Oil Cartel Gets Its Way
Andy Worthington
Intelligence Failures, Battlefield Myths and Unaccountable Prisons
in Afghanistan
Ahmad Faruqui
The Comedian of Pakistan
Bill Moyers
Society on Steroids
Rev. William
E. Alberts
Blessed are the Peacemakers
Timothy J. Freeman
From Kant to Lennon: Can War Really be Over?
Anthony DiMaggio
Democrats Continue to Capitulate on Iraq
Fred Gardner
Molecule of the Year, Cannabiodiol
Paul Krassner
Enhanced Hazing Techniques
Seth Sandronsky
17 Years of Meanness: Repealing California's Three Strikes Law
William Loren
Katz
Christmas Eve Freedom Fighters: Recalling the Battle of Lake
Okeechobee
Michael Dickinson
In the Dungeon of the Zabita
Ron Jacobs
Why Leon Russell Still Matters
David Vest
Doyle Bramhall's "Is It News?"
Poets' Basement
Orloski, Davies and Ford
Website of the Weekend
George W. Hates Santa
December 21,
2007
John Ross
New Massacres Loom in Mexico
Jacob Hornberger
Nothing Can Morally Justify the Invasion of Iraq
Dick J. Reavis
A
Way Out of the Newspaper Abyss
Jeff Cohen
and Norman Solomon
The 2007 P.U.-litzer Prizes
Peter Morici
Business as Usual as Recession Looms
Jack McCarthy
Let Us Now Praise Judith Regan (Even If She Did Sleep with Bernie
Kerik)
Raúl Zibechi
Sex and Revolution
Steve Early
How the Presidential Candidates Made Me an Atheist
David Macaray
Union Aftermath
Patrick Bond
Zuma, the Center-Left and the Left-Left in S. Africa
Lakota Freedom Delegation
A Declaration of Independence from the USA
Website of
the Day
Solomon v. Beck: Tale of the Tape
December 20,
2007
David Rosen
Mitt
Romney's Secret Life as a Pornographer
Alan Farago
The
Huckster and the Wreckage: Jeb Bush and the Subprime Mortgage
Crisis
Laura Carlsen
Standing Up to NAFTA
Ashley Dawson
The Return of the Bread Riot
Wayne Smith
and Jennifer Schuett
Cuba Changes, US Policy Stagnates
Website of
the Day
How to Talk to a FoxNews Reporter
December 19,
2007
Saul Landau
Is
the NIE Bush's Watergate?
Paul W. Lovinger
Hillary the Hawk
Norman Solomon
The Mad Corporate World of Glenn Beck
Dave Zirin
George Mitchell's Drugs of Choice
Marjorie Cohn
Bush Still Spinning Iranian Nukes
Sen. Russell
Feingold
The Iraq War is Exhausting Our Nation
Sonja Karkar
A Christmas Reflection on Palestine
Anthony Papa
Open the Drug Gulags
Christopher Ketcham
Pave the Holy Lands with Good Intentions
Davey D
Britney's Little Sister is Pregnant: Should We Blame Hip Hop?
Website of
the Day
When Republicans Use the F-Word on TV
December 18,
2007
R. F. Blader
The
Politics of Teen Pregnancy
George Wuerthner
Gunning for Wolves in Idaho
Steven Higgs
Can the NAFTA Superhighway be Stopped?
Vijay Prashad
Encounters with Ghadar
David Macaray
The Free Rider Problem
Ralph Nader
Nine Books That Make a Difference: a Reading List for the Holidays
Eva Liddell
Privatizing War Abroad, Invading Privacy at Home
Martha Rosenberg
While the Bodies are Still Warm: Drugs, Shrinks and Shooters
Dave Lindorff
When Impeachment is Out of Print
Peter Morici
The Consequences the Trade Deficit
Website of
the Day
Ron Paul: How Fascism Will Come to America
December 17,
2007
Mike Whitney
Staring
Into the Abyss
Tom Barry
Planning
the War on Immigrants
Uri Avnery
A
Gaza Masada?
Greg Moses
Crossing the Line in Texas
Allan Nairn
Terrorism; Counter-
Terrorism: Excuses for Murder
Patrick Bond
South Africa's Fight Between Hostile Brothers
Stephen Lendman
Police State America
Charles Jonkel
Grizzly Right of Way
Laray Polk
An Inside-Out Crisis in Gaza
Stephen Fleischman
Pawns in Their Game
December 15
/ 16, 2007
Peter Linebaugh
A
People's Penny for the Magna Carta
Howard Zinn
Bomb After Bomb
Standard Schaefer
The Greening of Big Tobacco
Raymond J.
Lawrence
Let's Take Christ Out of Christmas
Alan Farago
Down on Desolation Row: the Vultures and the Growth Machine
Saul Landau
Lord Byron and the Bad Tourists
Jenna Orkin
Lying to "Reassure" the Public: Bush's EPA and the
Post-9/11 Toxic Air Cover-Up
Ahmad Samih
Khalidi
Why a Palestinian "State" is a Punitive Construct
Robert Fantina
Politics By Photo-Op
Missy Comley
Beattie
Resistance Amid the Ruins
Ramzy Baroud
Of Mormons and Muslims
James L. Secor
A Vision for China's Future
Elijah Wald
Ike Turner's Music Won't be Forgotten
Website of
the Weekend
The Alliance for the Wild Rockies Needs (and Deserves) Your Support
December 14,
2007
JoAnn Wypijewski
The
Dirty Cad: What Giuliani's Sex Life Tells Us About Him
John Ross
Iraqi
Refugees Return: One Cruel Hoax
Jacob Hornberger
Terror Suspects Belong in Federal Court
Andy Worthington
Guantánamo and the Supreme Court: What Happened?
Allan Nairn
"Shoot Them on the Spot": Rewarding War Crimes
Dave Zirin
The Mitchell Report: Absolving the Owners
Dave Lindorff
The First Cut is the Deepest
Misty MacDuffee
Toxic Grizzlies
Ben Terrall
What Happened to Lovinsky Pierre-Antoine?
Dr. Mustafa
Barghouthi
Prerequisites for Peace
Website of the Day
Sen. Kit Bond: "Waterboarding is Like Swimming"
December 13,
2007
Paul Craig
Roberts
Shrinking
the Dollar from the Inside-Out
Mike Whitney
Dershowitz for the Defense--of Waterboarding
Ron Jacobs
Blank Check DemocratsL the Great War Funding Conspiracy
Norman Solomon
The USA's Human Rights Daze
Peter Morici
The Dragon and the Toothless Dog: China Doesn't Flinch
Sandy Mayes
Blocking the Strykers: 13 Days of War Resistance at Port Olympia
Franklin Lamb
The UN in Lebanon: Whose Mission Is It Fulfilling?
Jacob Hornberger
Don't Reform the CIA, Abolish It
Nadim Rouhana
An Interloper in My Own Land
Dave Zirin
On Pigskin and Petrol
Website of the Day
Rachel's Needs (and Deserves) Your Support!
December 12, 2007
Allan
Nairn
US Intelligence is Tapping Indonesian
Phones
Alan
Farago
How Sprawl Eats Its Young
Ray
McGovern
Torture, Lies and Videotape
Winslow
T. Wheeler
The Phony Pentagon Budget Cuts
Evan
Jones
The Raid on Great Western: Why an Australian Bank Might Spell
Doom for the US Farm Belt
James
Petras
An Open Letter to Sarkozy on the Exchange of Political Prisonsers
Joel
Hirschorn
The Horserace Fiction: Clinton, Obama and the Democratic Machine
Joshua
Frank
Why Ron Paul Deserves Our Attention
Sherry
Wolf
Why the Left Should Reject Ron Paul
Dan
Bacher
Survey of a Fish Graveyard
Website
of the Day
Men Eating Bugs
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January
9, 2008
Beyond the Sophistry
Why
the Trade Deficit Matters
By PETER MORICI
On Friday, the Commerce Department will
release data for the November 2007 trade deficit. The consensus
estimate is $60 billion, up from $57.8 billion in October. It
may be a bit larger or smaller, but either way, it comes to about
5 percent of GDP, That is an enormous drag on national income
and growth, and has corrosive consequences for our children's
future..
Budget Deficit
Sophistry
In the discussions about the
trade deficit, a great deal has been made of the U.S. federal
budget deficit; however, during the third quarter the current
account deficit, which includes goods and services, net flows
of foreign investment income and transfer payments, was $178.5
billion, but the federal deficit was only $57.3 billion. How
can a $57.3 billion domestic financing requirement cause a $178.5
billion external deficit?
In 1991, the federal budget
deficit was huge and the current account was in surplus. When
Bill Clinton left office in 2001, the budget was in surplus and
the current account was in deficit. That is the absolute opposite
of what those who blame the trade deficit on the budget deficit
would have us expect.
Of course the budget deficit
matters but so do a lot of other factors. That said, it is hard
to find good reasons for the rest of the problem in the competitive
fitness of the U.S. economy and business.
Each year the World Economic
Forum computes a growth potential index for 131 economies. It
examines factors like public finances (e.g., budget deficits,
efficacy of the tax system), the environment for the cultivation
and commercialization of technology, and quality of civil institutions
(e.g., the prevalence of corruption, evenhandedness of the judiciary
and respect for law), and openness to international competition.
In this assessment of national competitive potential, the United
States ranks 1st-China and India rank 34th and 48th.
Our labor force is much stronger
than education entrepreneurs in search of higher taxes would
have us believe. Virtually our entire native born population
finishes high school, two thirds receive some post secondary
training, and our universities are among the nation's most prolific
export industries. The most important determinant of quality
in the classroom is the student population, and if our universities
are populated by dullards, why do so many foreign students want
to pay our pricey tuition?
U.S. productivity is advancing
briskly. Since 1997, private business productivity has increased
2.7 percent a year. In durable goods manufacturing, where technology
matters as much as anywhere, productivity has been advancing
at a 6.0 percent pace. Those are solid gains.
New products and methods continue
to burst from our research labs. We would have to go back to
electrification, the railroad and the opening of the West to
find epic events that so transformed our economy and the global
economy as contemporary American innovations in new materials,
electronics and logistics.
So where are the problems?
I suggest we look in three places.
Oil, China
and Automobiles
Net imports of petroleum, products
from China, and automobiles and parts total about 110 percent
of the trade deficit, and no solution to the overall trade imbalance
is possible without addressing these segments.
Petroleum accounted for $26.3 billion of the
monthly trade gap in October 2007.
From December 20001, the cost
of imported petroleum increased $20.8 billion, the average price
of a barrel of imported oil rose from $15.46 to $72.49, and the
volume of imports increased from 353 million to 406 million barrels.
In 2008, prices are higher,
and the monthly oil import bill could easily exceed $35 billion.
Yet, neither the Republicans nor the Democrats seem inclined
to do what could be done to address our dependence on imported
oil.
Last year, the Congress managed
to push through the first increase in automobile mileage standards
in 32 years but don't cheer loudly. The 35 mile-per-gallon standard
to be achieved by 2020 is far less than what is possible.
The bill also requires the
production of about 2.4 million barrels a day of ethanol. Along
with other conservation measures, the 2007 Energy Act could reduce
U.S. petroleum consumption by 4 million barrels a day by 2030.
Over the last 23 years, petroleum consumption has increased by
about 5.5 million barrels a day, despite improvements in mileage
standards, automobile and appliance technology, and conservation.
Being optimistic, in 2030 we
will be just as dependent on imported oil as before. Factor in
falling production from U.S. oil fields, the situation gets worse.
We could do a lot better. Retuning
conventional engines and transmissions, more hybrids, electric
vehicles, lighter vehicles, and more nuclear power are attainable.
The Chinese are likely to turn in those directions in greater
force than we do. Then we can buy our cars from the Middle Kingdom
just like our coffee makers.
China accounted for $25.9 billion of the October trade
deficit, up from $23.8 billion in September and $5.5 billion
in December 2001. The bilateral deficit keeps rising, because
China undervalues the yuan, and this makes Chinese exports artificially
inexpensive and U.S. products too expensive in China.
China revalued the yuan from
8.28 to 8.11 in July 2005 and has since permitted the yuan to
rise 3.6 percent every twelve months. Modernization and productivity
advances raise the implicit value of the yuan about 7 percent
every 12 months, and the yuan remains undervalued against the
dollar by 50 percent.
China's huge trade surplus
creates an excess demand for yuan on global currency markets;
however, to limit appreciation of the yuan against the dollar
and drive its value down against the euro, the Peoples Bank of
China sells yuan and buys dollars, euros and other currencies
on foreign exchange markets.
In 2007, the Chinese central
bank purchased about $450 billion in U.S. and other foreign currency
and securities. This comes to about 15 percent of China's GDP
and about 45 percent of its exports. These purchases provide
foreign consumers with 3.6 trillion yuan to purchase Chinese
exports, and create a 45 percent "off budget" subsidy
on foreign sales of Chinese products, and an even larger implicit
tariff on Chinese imports.
In addition, China provides
numerous tax incentives and rebates, and low interest loans,
to encourage exports and replace imports with domestic products.
These practices clearly violate China's obligations in the WTO,
and it agreed to remove those when it joined the trade body.
Automotive products account for about $11.2 billion of
the monthly trade deficit. Japanese and Korean manufacturers
have captured a larger market and are expanding their U.S. production.
However, Asian manufacturers tend to use more imported components
than domestic companies, and GM and Ford are pushing their parts
suppliers to move to China.
GM, Ford and Chrysler carry
a significant cost disadvantage against Toyota plants located
in the United States, thanks to clumsy management and unrealistic
wages, excessive fringe benefits and arcane work rules imposed
by United Autoworker contracts. Recent negotiations have improved
the Detroit Three's cost position but did not wholly close the
labor cost gap with Toyota and other Asian transplants.
Recently negotiated labor agreements
should reduce, but not eliminate, these cost disadvantages. Even
with retiree health care benefits moved off the books and a two
tier wage structure, the cost disadvantage will remain well above
$1000 per vehicle.
Also, the central banks of
Japan and Korea have aggressively stepped up sales of yen and
won for U.S. dollars and other securities to keep their currencies
cheap against the dollar. This discourages Toyota, Hyundai and
others from moving more auto assembly and sourcing more parts
in the United States.
More Debt
and Slower Growth
Apologists for Chinese currency
and trade policies point out that U.S. consumers benefit from
less expensive products at Wal-Mart and other purveyors of subsidized
imports. But these bargains come at high cost: we are saddling
our children with debt to foreigners and slashing economic growth.
Trade deficits must be financed
by foreigners investing in the U.S. economy or Americans borrowing
money abroad. Direct investments in the United States provide
only about a tenth of the needed funds, and Americans borrow
about $50 billion each month. The total debt is about $6 trillion,
and at five percent interest, the debt service comes to about
$2000 per U.S. worker each year.
High and rising trade deficits
tax economic growth. Each dollar spent on imports, not matched
by a dollar of exports, shifts workers into activities in non-trade
competing industries like department stores and restaurants.
Manufacturers are particularly
hard hit by this subsidized competition. Through recession and
recovery, the manufacturing sector has lost 3.3 million jobs
since 2000. Following the pattern of past economic recoveries,
the manufacturing sector should have regained about 2 million
of those jobs, especially given the very strong productivity
growth accomplished in technology-intensive durable goods industries.
Productivity is at least 50
percent higher in industries that export and compete with imports.
By reducing the demand for high-skill and technology-intensive
products, and U.S. made goods and services, the deficit reduces
GDP by about $250 billion a year or about $1750 for each worker.
Longer-term, persistent U.S.
trade deficits are a substantial drag on growth. U.S. import-competing
and export industries spend at least three-times the national
average on industrial R&D, and encourage more investments
in skills and education than other sectors of the economy. By
shifting employment away from trade-competing industries, the
trade deficit reduces U.S. investments in new methods and products,
and skilled labor.
Cutting the trade deficit in
half would boost U.S. GDP growth by one percentage point a year,
and the trade deficits of the last two decades have reduced U.S.
growth by one percentage point a year.
Lost growth is cumulative.
Thanks to the record trade deficits accumulated over the last
20 years, the U.S. economy is about $3.0 trillion smaller. This
comes to about $1000 per worker.
Our Legacy
As a consequence of decades
of trade deficits, our children will be less productive, poorer
and saddled with huge interest payments to foreign creditors.
No surprise these costs are
overlooked by advocates of the status quo. Many work for private
equity firms, hedge funds, and large commercial and investment
banks on Wall Street. They champion outsourcing, as it offers
the opportunities to finance big deals that move Midwestern factories
to Asia and to enter Chinese financial markets. We would do well
to remember they are the same bunch that gave us the subprime
crisis, the collapse and foreign rescues at Merrill Lynch and
Citigroup, the melt-down in the mortgage and housing markets,
and the pending recession.
Meanwhile, the Bush Administration
lectures China but ignores the corrosive consequences of the
trade deficit. Leaders in Congress talk tough but have not acted.
Our children will be poorer,
much poorer for this sophistry.
Peter Morici is a professor at the University of
Maryland School of Business and former Chief Economist at the
U.S. International Trade Commission.
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