Major Economic Problems Facing the United States

The United States is facing economic disaster on a scale few nations have ever experienced. Most people are unaware of the easily observable signs of this emerging crisis. While we persist in our superpower mentality, we have quietly become a second-class country in many respects.

We no longer produce what we need to sustain ourselves, we import much more than we produce, and we are selling off our assets and taking on massive debts to sustain a standard of living we can no longer afford. Not only was this not the way we became a superpower but it is a sure way to lose this status.

The game plan of our international competitors is to render us completely dependent on foreign production, innovation, and financing. In losing domestic self-sufficiency, national security and leverage in foreign affairs will suffer greatly.

We are failing even to acknowledge predatory foreign trade practices undermining US industry. Instead we encourage US manufacturers to design, engineer, and produce in third world markets like Mexico and China.

Reversing the Trend: Some Suggestions for Action

What common-sense steps should we take to reverse the trend? First we should take direct action to reverse our out-of-control trade deficits. While our regulatory and tax systems have unnecessarily raised domestic business costs, the fundamental cause of the present crisis is three decades of extremely detrimental US trade and globalization policies.

Second, we must carefully manage access to our markets. We should not naively rest on the faith that other countries will hold themselves to our standards in areas such as the environment, labor, and competition policy. These standards affect the cost of production. If other countries fail to adhere to these standards, they gain an unfair cost advantage.

Access to our markets must be therefore conditioned on a strategic analysis of our own national needs first and foremost. As things stand, we have handed our sovereign rights to our domestic markets to international bodies like the World Trade Organization and are committed to disastrous "one-way free trade" agreements such as NAFTA and CAFTA. We are in a dramatically different position from emerging low-wage markets. They have everything to gain, and we have everything to lose. Our policies should carefully protect our wealth and resources rather than simply provide the lowest consumer cost regardless of the impact on our industries and our workers.

Finally, promoting open markets and economic growth abroad will not alone rebalance America’s trade accounts and domestic industrial collapse. Our industries have been so disarmed and dismantled that we now lack the knowledge, capacity, and investment capital to facilitate self-sustaining production. Dramatic new direction is required.

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