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July 28, 2014

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Letter to the editor:

Trade agreements undermine U.S.

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How many times have we heard “free trade” is good for the American economy? In 1973, we had our last trade surplus of $911 million. The past 38 years, we’ve had trade deficits, and it gets worse every year. Why?

When trade is in balance, there are good-paying jobs in the United States. When imports overload exports, industries that provided support to the middle class are undercut and American jobs vanish. The following free trade bills were passed since our last surplus: Trade Act of 1974, Trade Agreement of 1979, Trade and Tariff Act of 1984, Omnibus Trade and Competitive Act of 1988 and, last but not least, North American Free Trade Agreement (NAFTA) in 1993. Sometime in the next five years, our cumulative deficit with Mexico will reach $1 trillion thanks to the NAFTA.

America’s largest export is scrap paper at a value of $3 billion per year. That represents less than 1 percent of the $365 billion in merchandise from China in 2010. For almost 40 years, Congress and our multinational companies have lied to us, touting our exports but never mentioning the loss in American jobs due to imports.

Boeing started getting plane parts made in China. It built factories in China and gave the Chinese the building technology to get the parts manufactured correctly. China is building its first airplane manufacturing plant to enable it to compete with Boeing. Caterpillar is heading down that same road with China. What could possibly go wrong?

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  1. Mr. Starr and most other Americans need to come to grips with some basic economic facts. Cars are a good example.

    People in America in the car business want to make a good wage and have good benefits. Those same people want to buy a car as inexpensively as possible. To keep prices low, manufacturers outsource to lower cost foreign suppliers for parts of the car and often assembly.

    If everything on a GM car is made here in America and the GM car costs 12 % more than a foreign made car, Americans will buy the foreign made car. That's just a fact of life and as long as it is, we are going to have an employment problem here. This same dynamic is operating in more businesses and industries every day.

    Until (1) our standard of living drops and or foreign countries standard of living rises so the two are about equal or (2) Americans decide they 'are' willing to pay the 'premium' for American made products.... THIS ISSUE ISN'T RESOLVABLE.

    Americans want high wage jobs and inexpensive products. The math for that is never going to work out.

    Michael

  2. The markets are coupled. Europe sneezes and the US catches a cold and vice versa. We're all in this together like it or not. We put up trade barriers, and they put up barriers. Who suffers?

    CarmineD

  3. chuck333,

    I'm not suggesting that we 'voluntarily' lower our standard of living. I'm pointing out that if Americans insist on demanding and then purchasing the least expensive product (the one made in a foreign country or with parts or assembly in a foreign country), our standard of living will drop (actually has dropped) because employment that could be here, will be in another country instead.

    We cannot have it both ways. If we want the good, high paying jobs here, we have to be willing to pay a higher price for goods and services produced here.

    What's happened is our own doing in large measure. We're entitled and selfish and we are paying the price for that.

    Michael

  4. Mr. Starr: it's difficult to get a trade balance when the U.S. government subsidizes our exports without adding that cost onto the sales price: FOOD, RX's, AIDE. It almost seems intentional manipulation. Try RX: our large drug companies cannot incorporate R&D, even DIRECT to that drug. Therefore, the government pays a much lower price and sends it all to Africa and elsewhere where American taxpayers pay for ALL the AIDS drugs being taken, most of the vaccines worldwide (except Europe, Brazil). So the government gets to tell us it's only so many hundreds of Billions of our dollars but it's really triple or more--when you add back the real direct costs. Try FOOD: Let's try milk products. The government gives WIC, food stamps and such so people can buy milk at lower prices. The free market costs are not included: USDA and farm funding, government purchases for school lunch programs and meals given to illegals (breakfast, lunch and dinner). So IF we'd stop pretending that the price in the grocery store is the price we pay, we could raise (food) prices to market rates AND OUR EXPORTS would show much higher dollars. We'd still be exporting food and drugs since so many people and countries HAVE TO buy from us. In other words, we sabotage the industries on which we have monopolies and/or strong market shares so that we can live in an economic fantasy. (I know this is complex, but just follow the thoughts.)

  5. Roberta,

    That is an excellent analysis but like some of what I write, it is too complex for many Americans to understand. I am convinced that is the reason we are on the way to branding our free enterprise, market driven, capitalist economy as a 'failure' and going to a more socialized economic system.

    It's hard to watch it happen but all I need to do is have conversations with different Americans, read letters to the editors of newspapers, and watch man on the street interviews and I KNOW we have millions upon millions of Americans who are seriously deficient in education and intelligence.

    Without a serious, well informed and involved population, this nation cannot survive as what our Founders envisioned.

    Michael

  6. Suppose I prefer rear wheel drive vehicles (I do). Then suppose, as a homeowner, I prefer to have as one of my vehicles, a pick-up truck (I do). Suppose I prefer to take my guests out to dinner in an expensive European luxury sedan (I do). I don't give a damn about gas economy, or green BS, or econoboxes that get great mileage. I care about what I want, and drive, that fits MY needs. Most people with the money to afford my driving preferences would agree. Trade agreements? Who cares. If I can afford it, I drive it. Plain and simple.

  7. Re Future: Percentages of cars tagged "Made in America" have had percentages stated on the sticker long before Obama was even running for any office. My '91 F-150 was "built" in Canada, Mexico, and the USA. The percentage allowable to make it "made in the USA" was established well before the Obama era. Yet it was touted as made in the USA. Get a grip.

  8. Let me suggest the possibility that the principal reasons for the trade imbalance are more "social" than economic.

    1. The Las Vegas experience is an "export" when foreign tourists partake of it. We could greatly increase our exports if: (a) we made in easier and more convenient for foreign tourists to come here, but (b) we have "security concerns" after 9-11 and we habitually cut rather than increase the State Department's budget. The results are local unemployment and revenue losses that either have to be made up by local taxpayers or by cuts in local services.

    2. Most businesses have chosen to focus on the next quarter's results rather than long-term growth. This is a big problem with two sides: Side A, we generally do not make the long term investments necessary for major, lasting success in markets because they depress results in the short term and Side B, for the same reason, we do not build products that are tailored to foreign tastes (although China is becoming large enough as a market that some U.S. operations there are designing local products, but are still making them offshore there).

    I suggest to you that the problem is not in free trade but in ourselves.

  9. Michael 12:57: What IF we get out of the foreign aide business? What if our economy forces us out of foreign aide, military intervention, military bases worldwide, providing prescriptions worldwide for Aids, malaria, dengue fever....? Do we have enough time for our economy to recover?

  10. Chuck 5:43: Our standard of living drops every time the federal reserve eases quantities. It drops whenever we send money out of the country--for humanitarian purposes or not. It drops when we support hundreds of thousands of troops in Germany, England, Guam, Japan.... It drops EVERY time we engage in war and conflict. It drops every time Hilary uses her passport. It drops every time we send an ambassador and budget to spend overseas. It drops when we take in illegals, legal immigrants, and political refugees. Enough of the media hype of "It's the right thing to do." NO IT'S NOT. We cannot afford it. We're still paying for all this from the last 70 years. Since WWII ended, we've been telling ourselves that we're the richest nation and we can do anything we want to. We "did too much." Stop the insanity.

  11. NAFTA: the excuse we use for illegals truck drivers to kill us on our own highways, for them to traffic contraband, for them to smuggle terrorist plants in via Mexico--please research before criticizing this. Mexico is KNOWN for ties with terrorists infiltrating thru embassies. Do ya think NAFTA is putting OUR truck drivers out of work? Our farmers? Our ranchers? Our industry (manufacturers of farming equipment)?

  12. Roselenda: In response to your post regarding foreign aid, you might want to get Netflix to send you "Charlie Wilson's War" (Universal, 2007). After we financed the insurgency that kicked the USSR out of Afghanistan, we cut off foreign aid. Result, we saved a few millions that would have gone for schools and hospitals and infrastructure and now we have spent over $1 TN. What would have been better: (A) spending a few millions so as not to have created a haven for al-qaeda or(B) the $1 TN we have spent so far instead?

  13. Roslenda: In response to your post regarding U.S. Bases overseas, you might want to consider the comparative costs of keeping a base vs. the costs of having to try to re-establish the same capability in the case of a future conflict in that area. Usually -- but not always -- it is cheaper to maintain the base. (BTW, Guam has been a part of the United States since about 1898.)

  14. Roslenda, regarding your comments about NAFTA: Do you have any evidence that the U.S. Federal Motor Carrier Safety Administration is not doing its' job of inspecting Mexican trucks and drivers, or that U.S. Customs is not adequately inspecting loads at the border?