History has revealed the only way the USA can price compete again with free trade against the world.
The USA politicians, including Obama, Trump, and Clinton, believe that reducing Corporate Taxes will offset USA high labor costs to make USA products more competitive in the world and end the 500 billion yearly USA trade deficits.
I do not because the USA workers can ever compete with foreign laborers that are paid $200 a week when a US laborer has to pay $800 a month in rent alone. Add ever rising food costs, taxes Federal, State and local, higher medical cost deductibles, education, gasoline, transportation, etc. etc. and the math will never balance.
Even while high production automatic machinery will reduce production labor costs, it will not apply to all products and services unless the products are manufactured in very high quantities to offset the costs of the expensive machinery.
The Chicago Tribune on 9/29/2016
Kudos to an article that explains how in history, the USA was able to be labor price competitive and even monopolized the world by supplying the lowest costs products in the world. It has been said that we should learn from history, and indeed this article tells us exactly what to do.
Before I reveal it though, I ask you to read this Excerpt from a novel about what I surmised how King Solomon explained two seemingly conflicting wise sayings.
“Solomon, I noticed you studied the writings closely before you solved the riddle. Why did you do that?”
“We have a saying. Sometimes you must gaze upon details for a time in order to better comprehend a problem.” I replied.
“We also have a saying. Gaze not overmuch, and let thy vision be dimmed. It seems we have two contradictory sayings.”
“I do not believe so. My saying means that sometimes we need to study the details of a problem closely in order to find a solution. Your saying states that if you look at a problem too closely for too long, you may become distracted in meaningless details and fail to comprehend what is most important.” I replied.
What is the Problem Politicians Fail to Comprehend ?
The problem is that every year, because of inept USA trade negotiators, the USA has huge deficit trade balances. Yet the politicians still believe Free Trade is good for the USA economy. Politicians are so distracted by meaningless details they fail to comprehend which workers they are supposed to represent.
I believe this Excerpt explains the core reason of the misconceptions of the economic theory of free but failed theory, and why our politicians who favor free but unfair trade agreements in spite of the fact that an ACCUMULATION OF NINE TRILLION DOLLARS OF TRADE DEFICITS HAS RESULTED SINCE THE 1987 NAFTA TRADE AGREEMENT AND SUBSEQUENT CHINA TRADE AGREEMENTS WERE FIRST SIGNED BY BILL CLINTON.
In other words, the trade deals favor trade nations and their economies better than US worker and the USA Economy.
So What is the Secret Solution?
Just read the following Excerpt explained about the current hit play ‘Hamilton,’ one of the founding fathers of the American Revolution. In my opinion, If we could just return to this method to reduce USA product costs we can again, same as in past history, become price competitive with world labor costs.
Hamilton wanted a modern economy, which included funding the national debt incurred during the Revolution. As to why that mattered, think in terms of an international credit score. In the play “Hamilton” when Jefferson says it doesn’t matter. Hamilton answers with a civics lesson from a slaver.
“Hey Neighbor/ Your debts are paid cuz you don’t pay for labor.”
There you have it, the dirty little secret finally center stage where it belongs-free trade has always kept the strangest company. The slave South wanted, no, depended on free trade.
So How Does This Relate?
The USA will never compete with low paid foreign labor until USA labor wages are reduced to the same wages as foreign labor, or if foreign labor wages are increased to US labor wages.
In my opinion, the only viable solution to balance USA trade deficits is what Warren Buffet proposed. HERE
Or, we can reinstate slave labor in the USA to compete with foreign labor wages..
Then again, some US workers being paid minimum wages and working two-part time jobs without benefits or future opportunity for advancement, consider themselves now to be slave laborers stocking shelves with foreign made manufactured products because their former livable wage manufacturing jobs were outsourced.
The rich rules over the poor, And the borrower becomes the lender’s slave. (Proverb 22:7)
When you consider this proverb, consider who are the rich who rule over the poor in the USA. Then think of who borrowed the USA the current twenty trillion dollars to the USA National Debt and how it will be paid back to the borrowers.
If these questions interest you, read these two posts.HERE and HERE
Regards and goodwill blogging.
Chicago Tribune ‘A little rap ‘n’ rock on free trade by Douglas Bukowski.