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The American System is No Longer Sustainable

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The United States does not control its most popular and vital consumer industries anymore.  Many of the most prominent economic sectors in the United States are foreign-owned.  This means that in the end all of their profits are foreign-owned as well. 

Our economy is not competitive against those of other countries.  We cannot compete with Japanese technology, Chinese wage rates or European trade protections.  Our system has been opened up completely by "free trade" and is being picked apart by overseas interests.  At the same time, they are constantly rebuffing their own commitments to "free trade" in order to protect domestic industries.  It would be ridiculous for a nation to reduce its regulations on foreign buyouts and mergers, or to allow foreign wealth funds free access to its stock markets, or to actually encourage the outsourcing of labor and production overseas.  Unfortunately this is precisely the situation in the United States.  We are following rules which no one else in the world is committed to, and as a result they are taking us to the cleaners.      

Over the past several decades our entanglements with the WTO and NAFTA have reduced the manufacturing base in this country to such an extent that it is no longer possible to produce most of our consumption goods domestically.  All Americans are forced to send their money overseas on cheap imports; not simply because they want less expensive goods, but because there are no alternatives.  Instead of choosing between a product made in China versus a good made in the U.S., consumers choose between one made in China and another one made in Taiwan.

In the past we could always fall back on the fact that this economy was incredibly productive.  We produced ourselves out of the depression in the 1930s on the strength of our workforce and industry.  We no longer have a skilled and trained industrial workforce, nor do we have an industry to employ them.  Our engineers, our technicians, our skilled labor has all moved overseas.  Making matters worse is the fact that the few technical experts we do produce domestically are completely undercut in the job market by foreign guest workers.     

Modern America does not have the necessary manpower or infrastructure to employ surplus workers in wealth-sustaining industries.  We live off of imports, with our trade deficits in the past years alone totaling nearly $3 trillion.  Our government's insistence on maintaining "free trade," and the people's refusal to stop consuming on debt, is bleeding this country dry.

We can no longer act alone and enact policy directives that are in our best interests because we must placate countries like Japan and China. We need the approval of the European Union and the WTO before we place tariffs on imports.  We need Mexico and Canada to sign off on any attempts by our government to stop the flood of imported material into our nation.  We continue to support overseas rivals at the expense of our own industries – there is no better example of this than the Japan-U.S. auto market.      

Globalization results in advantages for one country and disadvantages for the other.  For the most part, the U.S. is the one on the receiving end of this imbalance.  Other countries are more than willing to finance our lavish lifestyle and service our debt, so long as we continue buying their goods and putting their interests before our own.  This system is not sustainable, and the United States would be served to correct the problem before it is too late.

 

http://www.economyincrisis.org/

Craig Harrington is pursuing a degree in History and Political Science at The Ohio State University. He is also a journalist for EconomyInCrisis.org.

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"Globalization results in advantages for one ... by William Whitten on Tuesday, Mar 10, 2009 at 12:51:05 PM
Though Craig Harrington articles all contribute us... by Jay Janson on Tuesday, Mar 10, 2009 at 1:57:38 PM
I wonder when all this will finally come to an end... by Douglas Kass on Tuesday, Mar 10, 2009 at 5:19:43 PM
"I wonder when all this will finally come to ... by William Whitten on Tuesday, Mar 10, 2009 at 11:18:13 PM