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UP FOR DISCUSSION: U.S. Must Prepare for Day of Reckoning

March 1, 2008
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Asian governments that dupe our leaders and take advantage of our free trade policies with their predatory trade tactics are draining the U.S. of its economic wealth. Communist Chinese leaders take offense at our superpower status and show hostility to our Navy fleet in oceans bordering its shores.

China does not have to fight a war to make the fleet go home. It is much easier and less costly to mislead and deceive our government officials into making decisions that have been and are continuing to destroy our wealth-producing manufacturing capacity.

Cheap labor, visions of large markets and greed for profits have seduced our transnational corporate owners and managers. These owners and managers outsource labor, capital, technology, R&D, manufacturing know-how and trade secrets. They have been and are continuing to dismantle our wealth-producing industries. As our economic strength declines, so will our Navy’s presence in the Pacific and our ability to defend our country.

Living Beyond Our Means

The Chinese have already done much economic damage. The U.S. had a total trade deficit of $764 billion in 2006, a new record. With China, the trade deficit was $233 billion, the largest ever with a single country. For the last five years, the U.S. trade deficit with China has increased by 20% each year.

Trade is necessary for America to prosper, but it must be balanced trade. Our total national debt is $9 trillion; $5 trillion is owed to foreign countries and $1.3 trillion of that to China. All three numbers point to an economic crisis.

Both the trade deficit and the debt owed to foreign countries show that the U.S. is living beyond her means. A $764 billion-a-year trade deficit is the same as $2 billion a day. Look at it this way: we are borrowing $2 billion a day from foreign countries to maintain our standard of living.

A nation with a large trade deficit is similar to a person living above his or her means. If a person has a successful career but loses their source of income (a job), they still may have credit available in the form of credit cards or ownership in their home and car. Thus, a person can continue to maintain their standard of living for a while by increasing debt on credit cards, or refinancing or selling their home and car.

Decreasing Value of the Dollar

Just as a person cannot continually increase debt, neither can a nation. The key difference between a nation and a person is that a nation can print money and delay the day of reckoning. Eventually, the value of our currency will decrease to the point that foreign countries will not accept it for their products or in payment of debt. In the last seven years, the dollar has lost over 50% of its value in relation to the euro, and it will continue to decline. At some point, the U.S. dollar will be replaced as the world’s reserve currency.

In addition to the $5 trillion we owe other countries, foreign companies also own or control over 8000 U.S. companies with a combined value of over $8 trillion. Many of these companies were bought with the intent of gaining global control of the key technologies and raw materials needed to produce advanced weapons (i.e., airplanes, computers, satellites and intercontinental ballistic missiles).

When blindly following the ideology of free trade, many Americans fail to see the connection and damage caused by the predatory trade policies that result in huge trade deficits and a huge national debt, a portion of which is owed to foreign countries. Most Americans believe we are a superpower. It is only our military that is a superpower, however. Our economy is Second or Third World class. Most Americans don’t see or understand the emerging economic disaster. Our government officials continue to encourage companies to send research and development, engineering, and manufacturing offshore.

The Wall Street Journal reported on December 20, 2007, that the U.S. Treasury Department had once again declined to designate China as a currency manipulator. All the numbers indicate the Yuan is 20 to 50% lower than its true market value when compared to the U.S. dollar. This is no accident. The Chinese are currency manipulators. The result is that exports from China receive large price advantages when competing with U.S. companies, causing many U.S. companies to fail or be so weakened that foreign companies can buy them at large discounts.

WTO Status

China also promotes exports and discourages imports. The government keeps wages low, rebates value-added taxes on exports, and charges value-added taxes on imports. They counterfeit and steal copyrights, trademarks and patents. They provide domestic industries with local tax incentives, offer special financing and charge tariffs on imports. They target specific industries to monopolize.

No U.S. company can compete with these predatory practices. All of the above violate World Trade Organization (WTO) regulations. Even with what appears to be numerous violations, the U.S. Commerce Department has failed to take action against China.

American politicians made a terrible mistake in 1996 when they voted to join the WTO. Joining the WTO gave Third World country bureaucrats control of U.S. international commerce. It is very difficult for the U.S. to win a case at the WTO. Many Third World country bureaucrats are as corruptible as the bureaucrats at the United Nations have proven to be. The chances of the U.S. getting fair treatment at the WTO are remote.

Action is Needed

The U.S. Constitution states, “Congress shall have the power to regulate commerce with foreign nations.” But Congress has given control of foreign commerce to the WTO. Congress must do what the people elected them to do, and what they were sworn to do. Congress must immediately cancel U.S. membership in the WTO. If they don’t, Asian countries will continue their predatory trade practices, continue destroying or buying U.S. companies, continue financing our debt, and continue buying our country. They will do this until we have nothing left to sell-no industries, no real estate and no natural resources.

The U.S. Government will then have additional trillions of dollars of debt. If a government could be bankrupt, ours would be. Social Security, Medicare and pensions will be without funds. All of our wealth-producing industries, mines and farms will be foreign-owned. The government’s ability to tax will be significantly reduced, along with its ability to defend our country.

The career politicians we sent to Washington, as well as the leading presidential candidates from both parties, still don’t see or understand the coming economic crisis. Wake up, America. Our day of reckoning is coming.

Do you have an opinion on an industry topic that you would like to see covered in Ceramic Industry? This is your chance! Simply contact Susan Sutton, Editor-in-Chief, at (330) 336-4098 or suttons@bnpmedia.com, and we’ll help you get your opinion “Up for Discussion” in a future issue. This is your column-by voicing your opinions, you can help make a difference in the industry.

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