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OpEdNews Op Eds    H4'ed 12/21/19

How U.S. Got Into Economic Distress

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Follow Me on Twitter     Message Joel Joseph

Waldorf Astoria, NY
Waldorf Astoria, NY
(Image by Alan Light)
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Despite a low unemployment rate and a high stock market, the economy is a disaster. College loans are out of control totaling more than $1.5 trillion. Our trade imbalance is unsustainable. Housing costs are out of whack. Most Americans are living paycheck to paycheck. There is a lot of blame to go around. In a report released earlier this year, the U.S. Trade Representative admitted that the United States had "erred in supporting China's entry into the WTO on terms that have proven to be ineffective in securing China's embrace of an open, market-oriented trade regime."President George W. Bush and Congress gave China's access to the WTO in 2001. In 2001, the U.S. trade imbalance with China was a large $80 billion. Now, the trade deficit with China is a whopping $400 billion.

China is Buying America

You may ask how does the trade deficit with China lead to higher housing costs? For the seventh year in a row, the Chinese were the largest foreign buyers of U.S. real estate. In 2018, foreign purchasers bought 266,800 properties in the United States worth $121 billion. More than $20 billion came from China. That is one way China recycles its surplus of U.S. dollars: it is buying America.China's purchases of homes have focused on California where housing costs have become unaffordable for most workers.

China is not just buying homes, it is buying U.S. companies. Chinese companies attempted to buy the Chicago Stock Exchange, but were stopped by the U.S. Securities and Exchange Commission. However, Chinese investors have taken over the following iconic U.S. companies:

AMC movie theaters;

Smithfield Foods;

Legendary Entertainment Group;

GE Appliances;

Waldorf Astoria;

Strategic Hotels and Resorts;

Riot Games;

IBM Personal Computers (now Lenovo);

Motorola Mobility.

President Nixon opened the door to China trade, but access to the World Trade Organization blew out all of the doors and windows. We have lost five million manufacturing jobs to China, hollowing out industries in Ohio, Pennsylvania, Michigan, Wisconsin and other states the same states that put Donald Trump in the White House.

It Is Not Just China

Republicans are not the only party to blame. Bill Clinton ran against NAFTA, the North American Free Trade Agreement, but signed it into law. NAFTA went into effect in 1993. In 1990, Mexico manufactured only 500,000 cars. Last year, Mexico produced about four million cars surpassing the U.S. auto industry. Mexico's population is 40% of the U.S. population, so it produces about three times as many cars per capita as the United States. The new United States Mexico Canada Agreement will not help.

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Chairman, Made in the USA Foundation, economist and lawyer, author of ten books and hundreds of articles.
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