In an April 29 open letter, the U.S. Business and Industry Council President Kevin L. Kearns rightly pointed out the lack of attention the domestic manufacturing crisis has received in President Obama's first 100 days in office. This trade group takes a very conservative - often protectionist - stance on trade issues, but the letter raised some good points. Here are some excerpts:
Yes, there is a crisis in the financial sector that requires attention, but there is a larger, cascading, and potentially more devastating crisis in the manufacturing sector, which unlike banking actually creates wealth.To date, your economic team's approach seems to be trillions for banks, but hardly a dime for manufacturing. You save wrong-doing financial houses from failure, but send good-faith, if sometimes poorly run, manufacturing companies into bankruptcy - a formula for disaster.The current economic crisis is ultimately rooted in America's longstanding failure to produce as much as it consumes. Without doing so, we cannot create the wealth needed to pay our way in the world and ensure a high standard of living for our citizens at home. Debt-financed "prosperity" was an illusion.The only way forward is for America to make and consume more domestic products, and cut imports and the foreign borrowing necessary to buy them. ...
The solution to our economic problems is not to print enough money to return to the previous unsustainable global trade regime. Rather, we must rebuild those parts of the U.S. economy that actually create wealth within our borders, and therefore restore a prosperity financed by earned income rather than by reckless borrowing.
The same letter condemned foreign countries' "predatory trade practices, including currency manipulation, VAT export rebates, government subsidies, IP theft, industry-government collusion, foreign cartels, dumping, closed markets, etc."It went on and called for the President to "administer some 'tough love' to our trading partners and a world economy still dangerously addicted to exporting to overextended U.S. consumers." If I'm reading it correctly, it's alluding to the administration's decision to not cite China as a currency manipulator, which is one of those things without quick answers or solutions.When a nation is faced with both internal and external problems, how should those issues be prioritized for maximized results with limited resources? In the manufacturing case, some real change from the domestic side will be a good start and actually increase the nation's bargaining power in global trade negotiations.
