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Date: 2024-06-25 Page is: DBtxt003.php txt00003829

Economics
Trade Flows

Trade Deficit Dots Connect to Billionaires ... US trade deficit with China just hit a new record: $42.2 billion in October 2012

Burgess COMMENTARY
The trade performance of the United States over a very long time ... like 150 years ... has been very poor. The exceptions were the periods of World War I and World War II when the US had no disruptions in its industrial operations and the world needed all sorts of manufactured materials.

The United States made profits from its agriculture and manufacturing operations and paid high wages. This created a huge consumer market and the world became a big supplier for this rich market.

US trade performance was impacted by the oil shock of 1973 and the subsequent increase in price for crude oil. After 1973, this has been a big part of the trade deficit for the United States.

The development of technology to operate efficient supply chains and logistics made 'outsourcing' of goods and services practical, and this gave China, India and other low wage countries the opportunity to become suppliers to the United States. China, in particular became a major source of goods for the United States, and in the process created a balance of trade imbalance of dangerous proportions. In October 2012, the imbalance was $40.2 billion.

This datapoint reminds me that there are two deficit situations in the US economy. One is the Federal fiscal deficit where government revenues are small than government spending. The other is the National balance of trade or balance of payments deficit.

I think of these as very different problems, something that is not always apparent in the general media coverage. The willingness of China to buy Treasury Bills which help to fund the US Federal Government deficit is possible because there is a US China trade imbalance. The impact of this on the 'state' of the US society and economy is not talked about very much, but, in my view it is very serious, but not taken seriously by the business and financial community nor political leaders. In my view this is very dangerous and irresponsible.
Peter Burgess

Trade Deficit Dots Connect to Billionaires

Our trade deficit with China just hit a new record: $42.2 billion in October, up from $40.3 billion in September. The goods deficit with China rose to $29.5 billion in October, up from $29.1 billion in September. This is the largest single monthly goods deficit with China in U.S. history. Meanwhile in the “fiscal cliff” scam the giant corporations are pushing for a “territorial tax” system that lets them off the hook for moving even more production and jobs out of the country. They already pretend they make their money overseas — heck, Google claims they made $10 billion in Bermuda!

A $40 billion trade deficit with China is $40 billion a month drained straight out of our economy. We borrow from China to pay for this, and owe China in the trillions. When you hear DC elites talk about Social Security and Medicare costing us ask them why they are not talking about this. This is the real problem.

Connect Dots

Connect some current news-item dots:

  • Giant companies get tax rules that give them breaks for moving production offshore to low-wage countries where workers have no rights. The giant companies use the breaks to funnel even more money to the billionaires at the top.
  • China in essence pays corporations to move production to China, offering up low-wage workers living in dorms, free facilities, subsidies, etc. because they want to control key strategic industries of the future. The giant corporations use the breaks to funnel even more money to the billionaires at the top.
  • States give tax breaks to companies to move there, stealing them from otherstates, in a race to the bottom. This defunds local schools, police, infrastructure, etc. The giant corporations use the breaks to funnel even more money to the billionaires at the top.
  • Republican legislators vote to make Michigan a low-wage state, saying it will “attract businesses” from other states. This puts even more pressure oneveryone’s wages across the country. The giant corporations use the breaks to funnel even more money to the billionaires at the top.
  • Walmart influences legislation to allow them to pay very little and offer few benefits, pushing costs onto taxpayers, with employees paid so little they qualify for public assistance. The giant corporations use this to funnel even more money to the billionaires at the top.
  • The “fiscal cliff” talks are a “shock doctrine” scare tactic to get tax breaks, and cut the things We, the People do for each other. The giant corporations use it to funnel even more money to the billionaires at the top.
  • Republicans, paid by the billionaires and their giant corporations,obstruct all efforts to fix all of the above.
  • The trade deficit is the problem. It drains money straight out of the country. It drains jobs, factories and industries straight out of the country. It drains our future.
  • We are competing with China and others as a country and we need a national trade/industrial/economic strategy to do that.
  • This piece was reprinted by Truthout with permission or license. It may not be reproduced in any form without permission or license from the source.
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