The
trade deficit is the dollar value of the excess of the cost of
imported goods over the dollar value of exported goods. It
is the major component of the Balance of Payments deficit, which
adds the dollar value of financial transfers and services
performed by foreigners (i.e., trips taken abroad by Americans)
to the trade deficit.
The trade deficit has exploded from $100 Billion annually a
decade ago to almost $700 Billion annually, or more than 6% of
the Gross Domestic Product. Much of the cost of financing
this deficit is being met by recycling dollars borrowed from
abroad and lending them back to the United States, which
increases its total indebtedness to foreigners. The
remainder is being financed by rapid increases in the domestic
money supply to offset the continuing drain from our economy of
our currency to pay for imports.
This situation is unprecedented in its scope and duration.
Obviously, it cannot continue indefinitely because the debt
service (interest) cost alone from foreign borrowing will
eventually become unsustainable. It is not "free trade",
because trade requires an equal exchange of goods over the
longer term, with year-to-year imbalances being offset by gold
transfers between the central banks (i.e., the Federal Reserve
Bank in the United States). Since leaving the modified
gold standard in 1971, the United States has been sending out
tens (and now hundreds of) of Billions of dollars annually to
cover its balance of payments deficit.. Dollars are debt: they
represent claims upon the real economy which ultimately must
provide services or things of value to their holders (or
claimants). The willingness of foreigners to hold dollars
for use to pay for imported oil and as a secondary domestic
internal currency in unstable countries has enabled the United
States to defer the real economic cost of repatriating those
dollars back to this country. China and Japan recently
have signed a bilateral agreement for their mutual trade,
eliminating the need for dollars to finance their transactions
by exchanging their own currencies.
Eliminating
the cost of imported oil by its replacement through renewable
domestic energy supplies is becoming an absolute necessity, both
from the financial as well as the environmental (i.e.,
greenhouse gas emissions reduction) perspective (see the Energy
and Environment Issue Paper). Tariffs to eliminate profits
from human exploitation should be imposed upon imports produced
by workers receiving slave labor wages and enduring substandard
employment conditions. The revenue from these tariffs
should be used to compensate American workers displaced by
foreign slave labor. If we don't tolerate such treatment of
human beings in this country, how can we morally justify
condoning and encouraging treatment of other human beings abroad
by purchasing products made with their labor? It is
impossible for American workers to compete on this basis even
if they were to be forced to accept similar treatment
because our workers could not survive living in America’s colder
climate under such conditions. In the 1920s, imports from
the Soviet Union were banned because the Congress said that they
were produced by slave labor. Why doesn't the Congress use
the same rationale toward slave labor produced imports now?
Finally, the United States must increase its exports to achieve
a trade balance with China and other countries that now hold
hundreds of billions of our dollars to reduce the foreign debt
service costs and stimulate our economy. Facilitating
foreign tourist visits by simplifying and expediting visa
processing creates many clean low skill jobs in areas that
desperately need increased employment. These countries should
be requested to buy American made wind powered electricity
turbine generators solar power systems, a solution which would
stimulate the renewal energy industry in the United States and
benefit its foreign creditor nations as well as the world's
environment by reducing future fossil fuel consumption and
greenhouse gas emissions.
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Designed by Imad-ad-Dean,
Inc.