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The Root of America's Depletion

By       Message Alexia Cameron     Permalink
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View Ratings | Rate It Headlined to None 1/8/09

An economic downturn of today's magnitude has been brewing for decades, but in 2008 the economic despair finally became palpable to American citizens. The United States must undergo a serious overhaul to uproot itself from the current economic meltdown. Our problems have to be addressed at the root, they cannot merely be covered up with increased stimulus spending.

To renew America's economy, the U.S. must stop rewarding overseas manufacturing and investment. Currently our tax code is set up to reward American corporations that invest abroad and penalize those corporations that invest at home. When American corporations move overseas they are only taxed on the money that is brought back into the U.S. So American companies simply do not bring money back into the U.S. Instead they keep their overseas profits overseas and that money which could have been funneled into the American economy is instead absorbed by foreign economies. U.S. companies then parlay their earnings into building more factories and infrastructures in the countries they are inhabiting like China and India.

Due to our current tax codes it is more profitable for American companies to manufacture their goods elsewhere and ship them to the United States. The U.S. needs to adapt tax codes that provide tax breaks to those companies that keep American companies on U.S. soil and stop providing tax breaks to companies that move offshore.

While American companies flee the U.S. for cheaper pastures, we are left with a barren manufacturing base with no means of producing anything of substance. We have no means of generating wealth and our manufacturing base and infrastructure are depleting. Our foreign trade balance is given to us in the form of debt. Americans do not manufacture the items that line the shelves of American stores. The products on the shelves are made in China and Mexico, not Michigan and Pennsylvania. Our foreign competitors loan us their money, and we in turn spend that money on their products. We are perpetuating a vicious cycle that will never end unless America can reclaim its manufacturing base and generate wealth.

The next administration needs to provide incentives for Americans to keep their companies in the U.S. Our "free trade" policies like the North American Free Trade Agreement and the World Trade Organization make it impossible for the United States to be competitive. NAFTA has led to the U.S. having an explosive trade deficit of $190 billion with Canada and Mexico. The trade deficit equals job loss. If we had a trade surplus it would mean we were producing instead of buying, there would be more people employed to do the production. America has become a service economy, leaving manufacturing to the rest of the world, which is truly the heart of America's distress. Until America restores its manufacturing base, we will have no means to recover.


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Alexia Cameron is the junior editor of She graduated with a degree in journalism from The Ohio State University.

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