Thursday, August 12, 2010

the U.S. continues to tilt at windmills

Actually, to be precise, the right wing in the USA continues to tilt at windmills, while the left wing continues to sing in praise of public expenditures, deficits and debts cannot be sustained.

But neither wing seems interested in recognising reality.

Here is one example of right wing cant, that I received recently: "the US trade deficit widen(ed) at the quickest pace since October 2008. The shortfall jumped almost $50 billion from May to June, an 18.8% increase, as US exports declined across the board and imports rose to just over $200 billion....Even before the (Troubled Asset Relief Program) and the expansion of the Fed's balance sheet, total US public and private debt as a percentage of GDP...stood at 290 percent...". SO WHAT IS THE SOLUTION PROPOSED?: "Congressional Republicans want to cancel the across-the-board increase (1.4%, proposed for apparently overpaid federal workers) in 2011, which would save $2.2 billion".

Even if it is universally agreed that federal workers are overpaid, and that the increase ought not to be granted, will a saving of $2.2 billion address a public debt that has been going up at an average of 4.12 billion PER DAY since September 28, 2007? (that's according to the US National Debt Clock:

Perhaps you argue that it is better to save SOMETHING rather than nothing?

True. But if saving only 2.2 billion is going to take legislative time, and you have the option of using that time to save let's say 25 billion instead, wouldn't that be a better use of the time?

So what ought the US to do?

There is only way to bring public debt and the balance of payments under control: reduce expenditure and consumption, while increasing savings as well as exports (i.e.manufacturing, not only services).

The reduction may be helped by legislative measures such as those proposed.

However, the increase in savings will only happen as individuals and households change their lifestyles, and as laws, rules, regulations, custom and culture also changes to enable and support a "savings-oriented lifestyle" for Americans.

However, any increase in manufacturing is not going to happen (in spite of gimmicks such as Obama's recent government support for Ford exports) as long as the current WTO rules continue to tilt the entire field against the USA and in favour of China and other "cheap" countries which are prepared to turn a blind eye to human and environmental considerations.

On the other hand, if the WTO rules were amended to create a genuinely level global playing field, there would be a chance for everyone to show what they are really worth, without benefiting from the tilt in the playing field.

My advice to Americans: please stop titlting at windmills! Change instead the tilt against you in the global trade rules! Sphere: Related Content

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