U.S. trade deficit balloons to $500 billion behind spike in U.S.-China trade gap.
Big news about the U.S. trade deficit was reported yesterday. The Department of Commerce revealed that the U.S. trade deficit for goods and services was nearly $500 billion in 2010 – a 33% increase over the trade deficit for all of 2009. Over half of that was due to a $273 billion trade deficit with China. The United States has a job-stifling trade deficit that is growing, and growing fast!
The deficit is growing because as Americans are starting to increase their purchasing again after a thrifty 2009, they are buying imported goods more than ever before, often from countries like China. In fact, the U.S. trade deficit with China in 2010 is by far the biggest trade deficit a country has ever had with another single country in history.
The U.S. trade deficit is having a significant negative impact on job growth. Experts estimate that every $1 billion in exports creates an additional 6,000 jobs in the U.S. Yet, despite $163 billion more in U.S. exports in 2010 (which created almost 1 million new jobs), jobs still are not being created in sufficient numbers to get the economy going or increase employment largely due to offsetting increases in imported goods. While increasing exports is a worthwhile goal, we cannot look for that to be the sole solution to our trade imbalance problems. We need Americans to cut back our reliance on imports by buying American.
We can solve our country’s economic problem ourselves by changing our buying habits just slightly and buying American more often.
The average adult consumes $700 per month in imported goods. If we could reduce that to $517 per person per month, we would have no trade deficit at all. With no trade deficit, we would likely have 3-4% unemployment. All we need to do is reduce our consumption of imported goods 25% to have jobs again in this country. That will secure our long-term economic future (a.k.a. our children’s future).
Can you cut 25% of the imported goods you buy and replace them with American-made goods? If you will do that, you will have done your part to set our country back on the path to economic security.
That is why I am buying American. Please join me. Take the Buy American Challenge today!
Until next time, here’s to doing what we can to support our country by buying American.
Randy
Buy American Challenge 
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Thanks for exporting to my household a link to your Feb. 12 blog post “Record Crushed: U.S. Trade Deficit with China – $273 Billion in 2010 – Biggest Ever Between Two Countries.” In it you write that
We can solve our country’s economic problem ourselves by changing our buying habits just slightly and buying American more often. The average adult consumes $700 per month in imported goods. If we could reduce that to $517 per person per month, we would have no trade deficit at all. With no trade deficit, we would likely have 3-4% unemployment. All we need to do is reduce our consumption of imported goods 25% to have jobs again in this country. That will secure our long-term economic future (a.k.a. our children’s future).
I’ve some questions for you.
– Because “buying American more often” means buying low-priced imports less often, Americans’ spending power will shrink. Americans will then have less money to spend at the movies, at local restaurants, on premium cable-tv packages, and the like. How do you know that the job losses that result from contractions in these industries won’t offset whatever job gains emerge in other industries from “buying American more often”?
– At least half of all U.S. imports are inputs used for production here at home by American firms. So if American firms substitute more costly American-made inputs for lower-priced imported inputs, many American firms’ costs will rise. These firms will lose market share. How do you know that the job losses that will result from these firms’ contractions and bankruptcies will not offset whatever job gains emerge from “buying American more often”?
– Because every dollar of America’s trade deficit is a dollar invested in the U.S. economy – investments that overwhelmingly expand the volume of America’s productive capital assets above what this volume would be without these foreign investments – eliminating America’s trade deficit will likely result in a net reduction of investments in the U.S. economy. How will less investment “secure our long-term economic future”?
I have other questions, but I’ll content myself with asking only the above three.
Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030
Dr. Boudreaux,
Thank you for visiting my blog. I appreciate your comments and direct questions. I truly love a good debate, so this should be fun. I realize, of course, I am choosing to engage in an economics debate with a renowned economist (or perhaps multiple economists), but hey, I guess eventually you have to play with the big boys.
So let’s go question by question. You asked:
– Because “buying American more often” means buying low-priced imports less often, Americans’ spending power will shrink. Americans will then have less money to spend at the movies, at local restaurants, on premium cable-tv packages, and the like. How do you know that the job losses that result from contractions in these industries won’t offset whatever job gains emerge in other industries from “buying American more often”?
My Answer:
I like how you phrase that… How do I know if jobs created from buying American won’t be offset in other areas? Of course, I don’t pretend to know because these things do not have a direct relationship on each other; job creation and unemployment is caused by a myriad of factors. So no one could ever know this sort of thing, much less be certain of it ahead of time. But, since we are currently experiencing a huge jobs crisis in this country, and you are the one who argues for a less intuitive method of creating jobs in this country than I do, I would like to know: How do you know that the job losses that result from $500 billion leaving the country via the trade deficit – which most economists say is stifling job-creation in the U.S. – are fully offset by employment increases in other industries as you claim? I don’t think you could possibly know that.
Your whole question starts with a faulty assumption. The assumption you made is that buying American will reduce one’s buying power. That is an entirely untrue assumption. I have been on a strict buy American program for a year, and I have more money to buy things I want and need than I ever had. Try to buy American for a week and you will see why. When you buy American, you rarely make impulse purchases. How many sweaters do you have in your closet? More than you need? Me too. Practically every sweater I have in my closet was purchased on impulse. That stops when you buy American because the majority of the consumable goods you see in malls and at Target are imported. Buying American makes you think about whether you actually want to buy something because American-made things are a little harder to find. Buying lots of stuff you don’t need reduces your buying power, not buying American. Buying American actually helps people live within their means and increases buying power. Plus, I am not saying everyone should entirely stop buying imports (so please do not pretend that is what I’m saying), what I am saying is that if Americans can cut their consumption of imported goods 25% and replace that with American-made goods, we will have no trade deficit, and many more jobs because of it.
Here is another wrong assumption. You assumed that American-made things are more expensive. Certainly that is true sometimes, but not always. There are lots of American-made items that are of equal quality that are less expensive than imported goods. Are American-made New Balance running shoes more expensive than imported Nike? No. Is Tito’s Handmade Premium Vodka (made in Texas) more expensive than imported Grey Goose? No. People pay more for imported items sometimes because there is a higher perceived value simply because the product is imported. But those misperceptions can be changed, and that is precisely what I am trying to do. Buying American in these cases will increase one’s buying power. Using your own logic, you should be a big supporter of buying American when American-made goods are less expensive. Not only would we create jobs from the goods being made here, but we would also be increasing our buying power through cost savings, which would lead to more jobs created in other areas like restaurants, cable-TV, and the like. I don’t think you can have it both ways. If you think it is better to buy less expensive imported goods because of the impact it has on job creation in other areas, then you should be a big supporter of buying American-made in cases when the American-made product is less expensive. Do you support buying American in these cases?
Then there is the issue of quality. A lot of the cheaper imported products are in fact poorer quality. How many $5 umbrellas have you broken? Me too. They say, “They don’t make ‘em like they used to,” for a reason. Much of the imported stuff we are buying is cheaper quality. American-made stuff is more expensive sometimes, but in most cases, products made in the U.S.A. are higher quality and last longer.
You asked:
– At least half of all U.S. imports are inputs used for production here at home by American firms. So if American firms substitute more costly American-made inputs for lower-priced imported inputs, many American firms’ costs will rise. These firms will lose market share. How do you know that the job losses that will result from these firms’ contractions and bankruptcies will not offset whatever job gains emerge from “buying American more often”?
My Answer:
Again, I object to the phrasing of the question. My method of job creation and deficit-reduction is straight forward and intuitive. Buying American-made things puts Americans to work who make those things. That is plain and simple. The burden of knowing is on you, since your position (as I understand it) is that American consumers should do nothing to correct the trade imbalance or create jobs for Americans by buying American.
I have never said that I think companies should stop using imported goods in production. The reason I have not said that is because I advocate a consumer approach to addressing the trade deficit and unemployment problems in this country. I believe that if we create demand for American-made goods by talking about the superior quality of American products and the positive impact buying American has on our economy – and millions of people start to do it – American firms will be profitable meeting that demand. I’m not sure how we could make American companies use domestic inputs even if we wanted to. But if the American people demand it, then companies will find a way to fill that demand profitably. But we are a long way from that. Right now you can’t even find the domestic parts content for most goods. If you think somehow that American consumers buying American-made goods will cause bankruptcies, I think you are wrong.
You asked:
– Because every dollar of America’s trade deficit is a dollar invested in the U.S. economy – investments that overwhelmingly expand the volume of America’s productive capital assets above what this volume would be without these foreign investments – eliminating America’s trade deficit will likely result in a net reduction of investments in the U.S. economy. How will less investment “secure our long-term economic future”?
Please reword this question and I will be happy to answer it. I’m not sure what you are asking.
Please answer this hypothetical:
You are considering purchasing one of two widgets. One is an American-made product, produced by an American-owned company and made with 100% American parts content. The other is an imported product, produced by a foreign-owned company and made with 0% American parts content. They are both the exact same price. In your opinion, which is better for the American economy?
A) Buying the American-made widget is better for the American economy
B) Buying the imported widget is better for the American economy
C) They are completely equal (neither A, nor B is better for the American economy)
I’d like to hear your other questions, and I would love to hear your answers to mine.
Thank you very much for commenting and starting what is sure to be a lively debate.
Sincerely,
Randy
Dr. Boudreaux,
You seem to not acknowledge that the trade deficit is a major problem that is destroying jobs in this country. Here are multiple prominent economists cited this year in major publications saying that our trade deficit is hurting job creation. What do you have to say to all these economists?
Randy
Source: Washington Post
Title: “Rising imports offset U.S. sales abroad”
Date: July 14, 2010
By: Howard Schneider
Excerpts: “The widening trade gap is putting downward pressure on U.S. [gross domestic product] when it is most vulnerable,” PNC Bank chief economist Stuart Hoffman wrote in a research note. “Less domestic production, because of increased imports and less demand for higher-priced U.S. exports, means less job creation in the manufacturing sector, a higher unemployment rate, and less income growth domestically.”
The trade deficit “is a net detractor for jobs so it does make it harder to restore full employment,” said C. Fred Bergsten, head of the Peterson Institute for International Economics. “It is heading back up (the trade deficit) and no one knows at what point it might hit a crisis level.”
Source: Washington Times
Title: U.S. trade deficit goes up by 5 percent
Date: July 13, 2010
By: Patrice Hill
“Imports are rising much faster than exports, and the overall trade deficit will increase even more sharply when oil prices rebound, threatening the economic recovery,” said Peter Morici, business professor at the University of Maryland.
“President Obama has cautioned Americans about the dangers of another boom financed by excessive borrowing. But unless the administration implements policies that reverse the huge trade deficits on oil and with China, the nation risks economic stagnation,” he said.
Source: Atlanta Journal Constitution
Title: “Closing the import-export gap; U.S. trade deficit hits nearly $50 billion.; Experts say figure has negative effect on struggling economy.”
Date: August 15, 2010
By: Michael E. Kanell
Excerpt: From the perspective of U.S. manufacturing, it got worse in two ways: Exports fell 1.6 percent and imports jumped 4.75 percent, an increase that economist Paul Kasriel of Northern Trust called “whopping.”
Some economists saw the import number as a sign of healthier spending by Americans, but they acknowledge it means slower growth.
Economist Peter Morici of the University of Maryland said it’s worse than that — the yawning gap between exports and imports is corrosive for the struggling economy.
The billions of dollars sent overseas to pay for imports do not return to support American jobs, he said.
‘A rising trade deficit slows growth and increases unemployment.’
Source: The Christian Science Monitor
Title: “Trade deficit rises faster than expected: How worrying is that?; The US imported $49.9 billion more in goods and services than its exported in June, up from $42 billion in May. Such a large trade deficit is unsustainable and a drag on the economy, experts say.”
Date: August 11, 2010
By: Mark Trumbull Staff
Excerpt: “Oil and consumer goods from China account for nearly the entire trade deficit, and without a dramatic change in energy and trade policies, the U.S. economy faces unemployment around 10 percent indefinitely,” University of Maryland economist Peter Morici says in a written analysis.
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Randy,
I totally agree that the $273 billion trade deficit with China represents a disaster as far as the destruction of US jobs is concerned. We have this horrendous trade deficit because the US imported $365 billion from China, but only exported $91.9 billion to China. for our 303.8 million populaton these numbers show that for every man, woman and child we imported $1,204 whereas we exported only $112. That is how we ended up with such a massive trade deficit with China.
In order to evalute how serious this is and what we as a nation should be doing about it, I suggest you also compare how other developed industrialized countries made out in their trade relations with China.
Take Germany, for example. With an economy between 1/4 and 1/5 the size of the US economy, Germany imported $104 billion from China. With a populaton of 82.4 million, that equals per capita imports of $1,266 per person; an amount that is just about the same as the US per-capita imports from China.
But when you look at Germany’s exports to China, the situation is quite different. Tiny (by comparison) Germany exported $73 billion to China in 2010. That amounted to $882 per capita which is 7.8 times the per-capita exports of the US to China.
How can this possibly be? Germany is also a high-wage nation, just like the United States. Germany is 99.9% dependent on imported petroleum which means that country is even more dependent on imported petroleum than is the US. Between 2002 and the end of 2010 the Euro increased in value with respect to the US dollar by 45% which means that during that time period German products, priced in Euros, became 45% more expensive in China than US products, which are priced in dollars.
There is a very clear explanation for why the Germans are doing so well in creating German jobs by selling products to China whereas the US is doing such a lousy job. And the Swiss do even a better job selling to China than the Germans. The Swiss have a substantial trade surplus with China are currently negotiating a free trade with China.
The US trade deficit with China is all result of a very crazy tax policy that our government implemented through the Tax Reform Act of 1976. Based on enabling legislation signed by President Kennedy in 1962, that 1976 Tax Act, signed by President Ford, drastically increased the US taxation of the income of US citizens who live and work outside of the United States. They are, in fact, double taxed by the US on their world wide income which has already been taxed once by the foreign govenment of the country where they have gone to live and work selling US-made products. The result of this double taxation is that paying tax to two countries means they simply cannot survive living and working abroad unless they are compensated much more than persons who are only taxed once by the government of the foreign country where they have gone to sell American products.
In case you are not aware, the US is the only country in the whole world that double taxes its citizens who live and work in another country. Germany does not double tax its citizens who move from Germany to the United States, China or any other country. Consequently they do not have to receive rediculously high compensation in order to survive when they go abroad to live, work and sell German products.
Make no mistake, China is today the 3rd largest import market in the world. But it buys its imported products from those who send their “salesmen” to China to sell them. Few products are purchased on the basis of price alone. It takes people with feet on the ground to establish contacts, support infrastructure and all of the other things necessary to sell products in China just like it does here in the US. That is why US companies have salesman here at home. But unlike the Germans, we do not have them in China because our tax laws make them so expensive that US companies avoid sending them to China. And even if they could afford it, our Equal Opportunity Employment laws make it illegal for US employers to discriminate salarywise based on national origin. In other words it is illegal for a US employer to pay a US citizen more money to go to sell products in China than he would pay a foreign citizen just because the US citizen has to pay double taxation, and needs more money to survive, whereas the foreign citizen does not because he is only taxed by one country – China.
It is likewise, under these same Equal Opportunity Employment laws, to discriminate on the basis of national orign in hiring. So the US employer is caught between the devil and the deep blue sea. He cannot pay a US citizen more than a foreigner to work in China even though he needs more to survive double taxation. because that is “compensation discrimination based on national origin.”
Our world-wide citizenship-based taxation has created such a minefield that US manufacturers are headed for equal opportinity anti-discrimination lawsuits if they seriously try to address the Export market. That is why we not only have a $273 billion trade deficit with China but why we have a $640 billion trade deficit with the world; 2/3 of which is with other countries like Germany, Japan, Korea, Canada and almost every other country of the world.
Our tax laws punish American companies and our citizens tax wise so they will stay home and NOT live and work abroad to sell the products of our industries in China and other world markets.
The solution lies in elimination by Congress of this unique double taxation. This $640 billion world trade deficit, by the Commerce Department’s own figures, represents the destruction of some 6 million direct and indirect American jobs!
I enlist your support to transform the US into a nation with an always-positive foreign trade balance like it was before that 1976 legislaton was enacted. For 95 out of the prior 100 years the US had a trade surplus; the largest of which in our entire history was in 1975. But with this 1976 legislation iour folreign trade was transformed in just one year into the perpetual trade deficit we have today. We have never recorded even one trade surplus since, and the cumulative US trade deficit, which began in 1976, now exceeds $7.7 trillon!
Randy, In my lifetime, we had a government who wanted to cut down on imports. They were able to pass taxes on foreign goods and world trade dropped 70% in 3 months and the great depression was a result of the,”don’t buy foreign” policy.
Our problem is not imports, it is our national tax policy, to complicated and to stupid to print here, but our politicians want the world to pay our taxes and expect the world to just buy our products, so they can have all the foreign money they want to spend on wealth redistribution, without sales and service people living abroad. It ain’t happening bud! Products are sold, not bought.
If our stupid, selfish, short sighted politicians,(both parties) simply passed the FairTax, our trade problems, our immigration problems, our employment problems, and growth problems, would disappear, in less than a year. They keep on being stupid with your and all journalists help and complicity. (they are all anti FairTax)
Randy,
My last post was long and a little strident, but accurate. Our National tax policy is our problem, not how much we import.
Void all national taxes, disband the IRS, repeal the 16nth amendment to the constitution, pass the FairTax. It allows sales people to live abroad and sell our products and services, without government interference. Germany, Switzerland, and yes France, imports more per Capita than we do, but they export and sell abroad, without penalizing their sales people.(They have a trade surplus) Our problem is not imports, it is our tax policy keeping exports down to the poverty level.
It saddens me that we gave our blood to make them free and they outsmart us, outsell us and laugh at our leadership.
I have two suggestions – one to cut down on imports and one to increase exports, both aiming to held close the trade deficit.
Cut down on imports by imposing a tax per gallon of gasoline sold in the U.S. from $.50 to $1.00. This will raise tens of billions of tax revenue which can help decrease the government deficit and will encourage Americans to drive less and to purchase fuel efficient cars. It will also push the balance for accelerating development of the electric car. Oil imports represent a big part of the U.S. trade picture.
Eliminate the cap on the Foreign Earned Income Exclusion so that American companies will once again be able to send American staff abroad to promote exports and to develop a strong place in world markets. Eliminating the cap on the Foreign Earned Income Exclusion may immediately cost the Treasury $2 billion, but as exports increase and small and medium-sized U.S. companies become international players, this cost will be compensated many times over through more U.S. jobs created by exports and consequently higher domestic tax revenues. I strongly second Roger Conklin on his point that the taxation on Americans working overseas creates a major competitive handicap for the nation.
Jackie Bugnion
Our export sales are severely hampered because of the double taxation of Americans working overseas. Period. We need ‘SUITS IN THE MARKET PLACE” to be really effective. Many companies cannot afford to put their salesmen in the field under the present tax structure and customers want face-to-face representatives from their vendors. That is a fact that is easily understood by those who have been ‘out there’
and easily misunderstood by those who haven’t.
Randy,
The majority of our U.S. citizens think as you do and that is how the politicians keep your chains secure. They are like magicians, they have you concentrate on a thing that is not the problem and tell you it is not solvable, when they use the other hand to pick your pocket. Our export problem is only looked at as a single facet of the diamond, when all they need to do is, turn the stone to the Tax Facet and there it is. They hate the solution to the problem. Taxation—pass the FairTax and in 9 months we will be a humming economy with labor shortages all over and politicians will have to find another way to pick your pocket for campaign contributions.
Today they tinker with the code so some rich person gets a break and then the rich person must make a “campaign contribution”. Sound like extortion? Well it is but they make it legal, by passing laws to make it legal.The current code stops business, makes most citizens criminals, trying to comply, and opens the field for fraud. Over a third, with taxable incomes do not file and 53% of those who do, pay no taxes and get a refund any way.
Sales people cannot live abroad and survive and products are not exported, because buyers want a representative who they can ask questions, get technical support, and visit with.
Like the commercial says, “it is so simple a cave man can do it”, but not our politicians.
535 people created the mess and ask you and me to send them back there to fix it. Insanity!!!!????
I lived in mexico for 2 years. The Foreign Earned Income Tax Exclusion made the first $90K of my income tax free in the US. I was never taxed in Mexico so this was a huge bonus to me and a huge part of the incentive my company used to lure me down there. I fail to understand where this double taxation you are so strident about occurs. I lived this personally.
Please allow me to comment on the comments submitted by Professor Boudreaux:
Yes indeed, a substantial portion of what the US imports consists of components that go into products that are manufactured here and are labeled “Made in USA.” It is indeed important that US products be price competitive and that does indeed depend on the ability of US manufacturers to be able to economically access components and materials from abroad. If we were to shut off this souce, for example, by imposing huge import duties on everything imported, we would cripple our own economy and in effect put this nation out of business. We have to import copper and most of our petroleum, for example, just to survive.
The Germans import just as much per-capita from China as we do, but what they do that we do not do is that the Germans go abroad and beat the bushes to sell German products. They do not do like the US does and just set around with folded hands expecting others to come to Germany to beg to buy German products. The more than make up for their imports by selling exports and that is why Germany has the lowest unemployment today that it has had in the last 18 years.
Yes, if we were to eliminate the trade deficit we would indeed reduce our unemployment to aroud 3%. But the way we have to eliminate it is to remove the tax barriers created by our own Congress that tie a ball and chain around the legs of our citizens through double taxation, as described in my prior post, so Americans can again go abroad and sell US products just like all of our industrialized trade competitor countries are doing so successfully.
Switzerland, for example, had an $18 billion trade surplus and 3.5% unemployment in 2010 but it was not because it does not import. The Swiss in fact import 6 times per-capita what we in the US import. But they have a trade surplus because they encourage their citizens to move abroad and sell Swiss exports. Switzerland’s 2010 exports were 8 times per-capita higher than ours! Switzerland treats its citizens who go abroad and sell exports as heroes whereas the US, through our repressive tax laws, punish US citizens like criminals precisely so they will stay home and not go abroad to sell our own products. Amd we blame everybody but ourselfves because we have a massive trade defricit. And if you think Swiss producs are cheap, you need to think again. Switzerland has a trade surplus with China because they go there and sell their products. Their 2010 exports to China were 50% higher in 2010 than in 2009. Their products are much more expensive in China than competing US products but the Chinese buy them in preference to ours because they are there knocking on doors to sell them while, because of our tax laws, our own government prevents our own citizens from going abroad to sell US exports.
It is not Chinese restrictions against US products or a failure on the part of the Chinese to allow its currency to aprreciate in vaule, but our own tax laws that are largely responsible for our lack of success in penetrating the Chinese market. It is that simple.
Please join me in prying open the eyes of our Congressmen and Senators in Washington to this fact.
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huh, perhaps Randy needs to start teaching Economics at George Mason University…….way to absolutely hammer the professor
Randy –
That was a spirited, thoughtful reply you made to Prof. Boudreaux, whose Web site led me to your post. I hope he will return to this thread with ripostes as you have invited him to.
Meantime, I’d like to lodge two responses to your response, that kind of cut across the questions and answers, so I won’t use the existing structure for them.
First, regarding cost and quality, which are kind of “chasing each other’s tails” in your response: the two aspects are usually combined in terms like cost/benefit – or in the vernacular, “bang for the buck.” I’m inclined to interpret your program as encouraging people to make marginal sacrifices in cost/benefit (spending more and/or getting less) to prefer American-made goods OR, at the very least, to resist the assumption that buying American might entail such sacrifices (wonder how that idea got so pervasive in the first place?).
Second, regarding American goods that DO (perceptibly) offer superior cost/benefit: no one is talking about such goods. Where American goods are seen to offer superior cost/benefit, everyone (both in America and elsewhere) is ALREADY preferring such goods, and they’re in the “disastrous” statistical results that motivate your post. Without them, the record-crusher might not be a record-crusher (things would be worse already). Again, maybe you’re mainly encouraging people to “give American a chance” and look again to see whether American goods offer even a SIMILAR cost/benefit proposition to imported competition.
If you’re proposing only that, you’re proposing heightened consumer awareness, and I can’t think of an economist from whom you would encounter opposition, and certainly not Prof. B.
I especially laud your consistent stance that neither consumers nor manufacturers should be forced by law to prefer American products. So long as you maintain that position, you are in fundamental agreement not only with me, but with Prof. Boudreaux as well, I am confident in saying (for him).
Joseph,
Thanks a lot for the comment.
I assume the Prof. Boudreaux did not ask you to make that posting, correct? Your final comment: “you are in fundamental agreement not only with me, but with Prof. Boudreaux as well, I am confident in saying (for him).,” left me wondering just a bit.
I would really like to see his response directly from him.
Those following this thread deserve to see the entire debate on the same trail of comments from the same authors.
Eagerly waiting…
Thanks again for your comment, Joseph. I actually would like to find some common ground with Dr Boudreaux. I have chosen this specific path because I believe there can be no reason to oppose buying American from a consumer awareness perspective as I am promoting it. We’ll see if we can actually find that common ground or not.
I am a large proponent of buy American as well.
The only issue is that if this momentum really took hold, the companies distributing goods to the US would just lower the prices to the point that the consumer could not say no.
This is why I think that something like a “business-calorie” should go into effect. If people could see that New-Balances executive compensation is lower than Nike’s on right on the label, I think they would be more inclined to turn down the lower priced good. Put it right into the consumers face.
The truth is that Chinese manufacturers NEED US consumption. If consumers will willingly pay a higher price, yes I said it, a HIGHER PREMIUM on US goods, then it would create millions of jobs here, and take that wealth that is now being distributed overseas to back home.
There is absolutely no way to avoid US goods being higher priced, but if the consumer can be aware that one of their US purchases is going to support a whole network of workers making at least minimum wage, and that a foreign purchase is going to support one very wealthy executive, and used with sweatshop labor, it may change the consumer’s tune.
The US is addicted to the lowest price, we need to be a lot more conscience of our decisions. It is true their will be less discretionary income, but the income we do spend will go back into our economy and benefit everyone living here. The price of a more expensive American good, is the price of having low unemployment.
Thanks.
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