By Eli Fishman
The Commerce Department reported that the U.S. trade deficit reached $489 billion in 2003. The amount represents an increase of 17.1 percent over the 2002 figure.
The largest portion of the deficit was with China at $124 billion. The next largest U.S. trade gap was with Japan at $66 billion. Third was Canada with a $54.4 billion trade gap, followed by a deficit with Mexico at $40.6 billion.
These deficits equate to the loss of millions of good-paying American manufacturing and related jobs.
According to the U.S. Trade Deficit Review Commission, the key causes of the deficit include high barriers to trade in foreign markets; predatory practices such as dumping, which is underpricing goods to gain market share; multinational companies driving globalization; failure of U.S. firms to adequately increase productivity by investing in technology; and failure of foreign nations to enforce labor and environmental laws and observe internationally recognized labor standards.
Thus, the huge deficits were caused by a combination of unfair trade practices by foreign countries and by the failure of U.S. companies to remain competitive by investing heavily in new technology.
American companies chose instead to exploit captive labor in China or let the Japanese invest in technology to produce sophisticated products like laser optics and high-end electronic equipment.
The issue not addressed by the review commission is the willingness of the U.S. consumer to abandon any semblance of loyalty to American-made goods. There is no shortage of stories about Nike using sweatshop labor in China and Vietnam to make its shoes. Yet Nike owns almost half the U.S. shoe market as a result of its aggressive marketing.
Oppressed Chinese workers make virtually all our nondurable goods from clothing and shoes to consumer electronics and small appliances. Since the Chinese cost of labor is pennies an hour, goods produced there are available at very low prices.
Although the low prices appear attractive, consider the effects of buying these products as expressed by the review commission:
A rise in U.S. income inequality and stagnation of incomes for most American families; elimination of millions of good manufacturing jobs and increased economic insecurity; depressed wages for most U.S. production workers and declines in job quality; and declining U.S. competitiveness on world markets.
The Chinese goods, then, come at a very high price. We are exchanging our cash for their cheap goods. We get limited use of the goods. They get to invest in their infrastructure, technology and educational institutions for future growth. Replacing manufacturing and engineering jobs with minimum-wage cashiering jobs places everyone's economic security at risk.
We are moving the focus away from Main Street needs and on to Wall Street. We have seen CEO salaries increase from 32 times that of the average worker in 1980 to 531 times in 2000. Income disparity has grown considerably. According to the Federal Reserve, the top 1 percent of American households owns 38 percent of all U.S. wealth. The bottom 80 percent of American households owns 17 percent of total wealth.
As U.S. wealth becomes dispersed into the hands of foreign countries and concentrated in the hands of a small group of U.S. citizens, the quality of life for the majority of the American people is sure to decline. When this descent occurs, the quality of life for the rich and for other countries dependent on U.S. wealth will follow.
Eli Fishman is the owner of Cape Shoe Co. in Cape Girardeau.
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