Dirty Words: Protecting America, Protecting Our Future

Each month brings a new record trade deficit and there is no sign that anyone in either political party is even aware of this issue or has a plan to change the trend. If we continue to export our assets and import finished goods, we will eventually run out of assets and our collateral, credit, and buying power will decrease. Our standard of living will decrease.

This is already happening with rising energy costs. Without a competitive trade position, we have no power to negotiate with our foreign oil suppliers. They are no longer beholden to us for basic goods as we are to them for oil.

European and Asian countries have supplanted our economic purchasing and bargaining power with the Middle East. Economic sanctions will have less and less effect. Our core platform from which we now negotiate with OPEC is the military stability the US helps to bring to the Middle East. Confounding this is the fact that our war with Iraq, Afghanistan, and other military operations are being financed by selling government bonds to Europe and Asia. Our obligations are becoming dangerously numerous, precarious, and usurious.

The United States Congress is charged with passing legislation to protect the citizens of this country. Many people associate protectionism and tariffs with back-room corporate subsidizing and efforts to prop up dying industries that should be allowed to fall based on their own free market failings in management and technology. They cite instances of Japanese failed loans as evidence that such central stimulus is prone to terrible consequences.

In reality, despite a "slumping economy," by all meaningful measures Japan is one of the most prosperous nations in the world having a tremendous trade surplus each year with the US, China, and Europe. Here are some facts about Japan's current economy:

• It is a country that accounts for 1/3 of the entire world savings (meaning reinvestment as opposed to wealth eroding consumption) each year (at a world beating rate of 15% of GDP) compared to a US level of 1.7% in 1999 (the lowest level since the great depression).
• It is a country that holds more than 1/3 of our US national (government) debt.
• According to the IMF, Japan's net foreign assets have quadrupled in the last 12 years and their current account surpluses in the 1990's were 2.4 times that of the 1980Õs.
• Its so-called huge and oft misquoted internal government debt is financed almost entirely by the Japanese themselves and on a net basis is actually quite marginal considering that much of this debt goes towards the purchase of US government bonds (i.e. the Japanese government borrows money from its people to purchase US debt securities).

Japan is a net creditor country, with tremendous industry, that does not rely at all on internal consumer spending for its economy, and has managed to accomplish all of this while being smaller than the state of California, having 86% unusable land, whose only natural resources are fish, and a country within 50 years of complete decimation following World War II. This is a result of intelligent planning and protecting their industry and economy from others who would try to exploit them as is being done to the US.

The absolute truth is that corporations in this country are tremendously disadvantaged compared to the foreign subsidized competition. We are subject to free-trade policies while other countries effectively are not. By using quotas, customs restrictions, tariffs, subsidies, local partnership laws, and technology transfer requirements, other countries are circumventing so-called free-trade agreements and running roughshod over our good intentions. These countries control the release of this information so it is not even possible for us to enforce their part of the trade agreements.

Corporations from other countries encourage this free-trade thinking here while receiving heavy research, development, and manufacturing subsidies back home. An example is the European Union's Airbus which is heavily subsidized by European countries and yet has retained the services of the Republican National Committee Chairman Ed Gillespie's Washington lobbying firm (Quinn Gillespie & Associates) to lobby for continued free-trade policies here in this country. Other free trade proponent examples include media sources such as "The Economist." This magazine is owned and controlled by interests in the United Kingdom, one of the largest purchasers of American assets and a country with huge monetary gains to be had by the continued trade deficit. It is criminal that we should allow other countries to dictate our public policy in this fashion.

We are forcing our companies to outsource to cheaper labor markets or markets with better technologies in order to compete globally. For example, in order for Boeing to compete with the subsidies that Airbus receives, the recently developed next-generation Boeing 7E7 "Dreamliner" was 1/3 designed and manufactured by Japanese companies. America simply could not compete. Other examples include the rising use by Ford and GM of Honda and Toyota critical parts such as engines and hybrid systems. By sourcing these key components instead of producing them internally, the remaining two domestic auto manufacturers are resigning themselves to defeat in competing with their rivals from abroad. Ford and GM are beginning to resign themselves as assemblers of foreign-made components.

However, the rational mind will have a hard time faulting our domestic corporations for their actions. They are only performing their fiduciary duty in order to compete and to survive given the parameters of the rules, laws, and resources of this country. It is the responsibility of the government, not individual corporations to make decisions to protect the interests of our country in general.

Click here to contact your Representative in Congress.

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