September 8, 2010

Free Trade & Smaller Military – Necessities for Sustained Future Economic Growth

 On August 1, 2010 this blog stated:

“We are in the midst of a Great Recession that could have been a depression. The net worth of all Americans were affected negatively, as has their optimism and willingness to go on spending binges as they have over the last several decades. Controlling the binge is a good thing; however, it means that we must find another engine for our growth rather than the American consumer. The good news is there is a new engine, and an established one, that will drive us to prosperity again.
The new engine is exports. The rest of the world is rushing to catch up to our life style and wealth. They want to consume and someone is going to fill their desire. People throughout the world are looking to increase their consumption of goods and services. If we do not meet this demand there are other nations clawing to fill their needs. These consumers are in ChinaIranSoutheast AsiaIndiaPakistan, Eastern Europe, South and Central America, Africa and the list goes on and on and on…...”

Exports will only work if there is indeed free trade with the rest of the world.

Today China is not practicing free trade. China is artificially keeping its’ currency low. As a result, it is more
expensive to buy goods from the US then it should be. Chinese goods for Americans are artificially cheap. This results in Americans, and the rest of the world, buying more goods from China then they would if the Chinese currency was valued to the market.

The US has been weak-kneed on this issue. If we are going to get back to prosperous times, we need to address the currency issue. This is not going to be easy. China is a major creditor of ours. We all know how much power and influence our lender has over us in our personal lives. China has that same influence over us as a nation.

Other free trade issues need addressing. For example, Japan places a very high tariff on cars that we export to Japan. This also has to change.

After World War II, the United States defended the free world at great financial cost to this country. We also assisted the free world in getting back on its economic feet. That was then; this is now. We are proud of what we did to help the world to recover from the devastation caused by World War II. We were equally proud of what we have sacrificed to help our allies get back on their economic feet. What we did defines who we are. We are a caring, loving and giving people. We would not want it any other way.

Many of the countries that we have helped, both economically and defensively, are now some of our biggest economic competitors. If we want to prosper, we can no longer subsidize their defense and accept unfair trade restrictions. It is unfair of them to expect us to continue doing so.

To review the blog of August 1, go here.

Update September 16, 2010

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