Trade Deficit

What economic thought exists considers the Trade Deficit in terms of expanding Exports, a Recession constricting imports, or accumulation of debt to foreign nations and individuals. None consider the real error which brings on the Trade Deficit: the failure of American production capture of the American Consumer markets. Each idea must be considered separately.

Expansion of Exports finds limitation because America is a Speciality Exporter. We export Information Technology (IT), and high-tech Products. These are Speciality Products, with a limited market along with large Contracts for Product at high prices. The limited, but high-tech, market means high prices quarranteeing stiff competition. The high Cost of technology alongside the lack of compatabilty between systems insure large, long-term Contracts of huge value. Loss of a singular Contract can generate a huge loss of Export value. Our Export industry is too concentrated in high-tech markets with few capable Buyers. We need to expand our Product line.

Inciting a Recession to reduce Imports will not work with the Walmart philosophy. Accumulation of debt continued through the last Recession, as American Consumers assumed additional Consumer debt in the face of increasingly good-value purchases. Consumers must be stopped at the Retail Checkout Counter, not by either Banker or Layoff. A Recession will only restrict Imports when there exist higher Retail prices. Devaluation of the Dollar, though, has its own problems, most specifically, necessary Labor cadres and Professionals almost automatically demand Wage increases to maintain purchase patterns. Foreigner Suppliers also raise objections to Devaluation of the Dollar, as it is 'ex post facto' elimination of their Business Profits.

Increasing American debt to foreigners lacks an effective appeal, as it insures American Business Profits are curtailed in Debt service to foreigners. It's basic ineffectiveness in producing Trade balance comes from the fact that Debt Service simply places more Dollar stocks in the hands of foreigners. We are simply purchasing Debt as well as Imports. The Trade balance loses greater equilibrium.

Loss of American Consumers by American Producers to foreign competition stands as the major culprit in the Trade imbalance. Economists claim the causes are Environmental standards restricting Pollution, rising health care costs for Workers, higher Wages, and higher Taxes which eliminate the competitiveness of American production. The Above are all detrimental to the bottom line of American business, but not the realistic causation for the shift to Imports.

The real cause of the shift to Imports lay in American business refusal to capitalize industry which will remain Labor-intensive, or which provides lower Profits per Capitalization than in the high-tech industries. Modern Corporate structure insists on the highest level of Profits to Capitalization consistent with high-tech industry, canceling any lesser potential investment even though very profitable. This same Corporate structure refuses to capitalize any industry of Labor requirements,which might lead to unionization of Workers who insist on Profit-sharing. This produces the real desire to tansfer heavy industry capitalization Overseas. These two elements influences Corporate decision far more than does the Economists' claimed causes; proof existing in Corporate investments going to ununionized foreign placement with minimal Wage levels, though there is immense State and Local competition to reduce tax burden and Welfare commitments for new business. This stands as true because Corporations will endure high foreign taxation and Export Costs, even radical Environmental standards. lgl