- Posted May 7, 2014 by
Washington DC, District of Columbia
Political Causes of American Decline
Political Causes of American Decline
This article is the second in a 3-part series, "America Can Be Prosperous Again." Part One described our economic problems, Part Two describes our political problems, and Part Three will propose a 2-phase solution to unite our country and restore prosperity.
By Will Wilkin, for Balanced Trade Associates.
In my previous article, America Can Be Prosperous Again! Part One: Economic Problems, we saw how Free Trade policies are dismantling our productive economy, primarily through off-shoring and outsourcing of manufacturing and other high value-added industries. Basically, our middle class is being destroyed by a flood of cheap imports, because the loss of manufacturing removes so much of the engine of wealth creation from America's economy, with devastating ripple-effects in many sectors beyond manufacturing.
Can we fix it? Yes, and the solution provides a happy ending to this series...in the next and final article. But before we can do that, we need to look at the policy and politics of our problems.
Trade Deficits and Globalization
The graph above "Balance of Trade" shows how, beginning with the Nixon administration in 1970, replacing protectionist trade policy with Free Trade policy ended 75 years of trade surpluses, now replaced with chronic, deepening and unsustainable trade deficits. The red ink in our goods trade totals over $10 Trillion just since NAFTA in 1994. We didn't just lose that $10 Trillion in goods trade, we also lost all the additional multiplier-effect jobs and industries that $10 Trillion would have supported. Think of the industries and jobs we would have in America today if all that trade deficit consumption had been supplied by our own workers and factories!
Not coincidentally, this historic change in our trade policy also brought the decline since 1970 in manufacturing employment as a percent of all US jobs, described in the first article in this series. But why did that change in policy come about?
After WW2, we were the only economic and political power left standing, and for 2 decades we dominated the world economically, politically and militarily. The only challenge to our power and wealth came from the Soviet Union, a rivalry known to historians as the Cold War. In the competition to win the strategic alliances of many smaller countries whose economies were finally developing some industry, America began opening its markets to imports from those countries. We were so rich we didn't see the economic danger in it, only the geo-strategic gain.
That was the political thinking in Washington DC in the 1960s and 1970s. It was reinforced at the same time by the economic thinking of Wall Street, big banks, and US-based corporations that wanted to become more multinational to expand their markets abroad. All these interests had an economic globalization agenda that meshed perfectly with Washington's Cold War alliance strategy.
And so that is how America came to abandon its 180 years of protectionist trade policy, replacing it with a growing liberalization (lowering) of trade barriers, eventually moving with NAFTA into the full-blown Free Trade policies we have today. The results have been devastating for our country, as we see, for example, in the vanishing of America's garment and electronics industries. If you've gone shopping in the last 20 years you have noticed that even "American" brand manufactured goods are mostly all imported now. Domestic manufacturing has been drowned in a flood of imports, as measured in our annual trade deficits averaging over $700 Billion every year.
This abandoning of the national economic interest in favor of free trade is described in detail in my article Origins of America's Economic Decline, an interview of Ken Davis:
Mr. Davis resigned his position as Assistant Secretary of Commerce in 1970 in protest against this liberalization of our trade policy just as it was beginning. Today he is the Director of Balanced Trade Associates, trying to reverse these disastrous Free Trade policies and replace it with a Balanced Trade policy that limits our imports to the same value as our exports.
It is a fight worth winning, but the solution is not even on the radar screen of the White House or Congress.
Instead, the Free Trade liquidation of American manufacturing and prosperity continues, as the Obama administration attempts to expand and accelerate it by asking Congress to pass "fast track" rules to ease passage of 2 new Free Trade treaties: The Trans-Pacific Partnership (TPP, with Asia & Latin America), and the Transatlantic Trade and Investment Partnership (TTIP, with Europe). I say "passage" rather than ratification because "fast track" would adopt these treaties (like many of our other recent Free Trade treaties) without Constitutional ratification, which would require approval by "two-thirds of the Senators present," according to the US Constitution Article 2 Section 2. In a further affront to American democracy, these latest 2 treaties have been written in secret negotiations, staffed by over 600 lobbyists and executives of globalized corporations, mostly international enterprises that have zero loyalty to the United States or any other country.
What is Wrong With Our Politics?
Now for the last part of the problem. Citizens have grown more cynical about our political system as politics have grown more divisive and dysfunctional, with much finger-pointing over who is responsible for the decline we all feel. There have been heated culture wars while globalized corporations and their executives poured billions of dollars into both political parties. The leadership and majorities of both parties deliver Free Trade policies to their corporate sponsors, while attracting votes from the citizenry this impoverishes. How do they keep us voting for them? They give us divisive culture wars about hot-button emotional issues like guns, gay marriage and contraception. Nowhere in our politics is there any plan to rebuild our prosperity or find any common ground as a nation.
The result? Those citizens who think of themselves as conservative or liberal tend to see only bad in the other, and debate rages over whether government spending must be cut to fix the fiscal crises or must be expanded to fix the social crises. Almost nobody talks about the elephant in the room: our ballooning trade deficits now averaging over $700 Billion every year for the past decade. As if blind, the fiscal conservatives hold the tusk of public debt while the populists hold the tail of public misery. Both sides are right about the problems but neither sees the whole picture and neither has the solution.
Is there a way we can all come to see the big picture that promotes common ground as citizens and reverses our economic decline? YES! The next article in this series will outline a solution to be proposed by Balanced Trade Associates that can revive our country's prosperity AND transform our politics into a more cooperative and optimistic project.