How many times have we heard "There's no fast way to restore our industrial economy and its good jobs! It will take years of investment in "green industries" and other new technologies. A whole new world of global competition is causing the problem!"
To be blunt, that's nonsense. The trouble in our U.S. market began 35 years ago in the early 1970's under President Nixon. Wide-open free-trade policies were adopted to help our multinational companies gain easier access to foreign markets.
We ceased our long-held practice of keeping a positive balance of trade with the rest of the world. Global opportunities were seen as far more important than our own rich market.
But other countries, especially China, adopted mercantilist policies aimed here. We should have stayed strong both at home and in global competition. As we lost business here, we also lost thousands of companies and millions of jobs. Our trade deficits grew beyond any amounts economists had imagined possible!
They totaled $8+ trillion for the past 35 years, and more than $6 trillion just for the most recent ten years - the largest transfer of national wealth in world history!
But there's a bold, fair way to repair this grave mistake in national policy without government deficit spending. In 2003, Warren Buffett wrote in Fortune Magazine, "Our trade deficits are selling America out from under us. We've got to fix it now, and here's how to do it". Then came the "SILVER BULLET". He said, "We should make balanced trade the law-of-the-land again and enforce it by holding total annual imports down to the level of our own exports. Import Certificates would be issued by the U.S. and offered to all comers in an open trading market."
To use 2008 figures, our total exports were running at $1.6 trillion. By limiting imports to that amount instead of our actual $2.1 trillion. $500 billion of sales annually would be shifted to back to U.S. factories and workers. We'd still be offering the world's biggest market to other trading nations. That's not protectionism at all!
If the Buffett Plan had been adopted promptly,we'd have at least 8 to 10 million Americans back at work. In addition, we'd have established the principle of market-sharing that's crucially important for creating new industries -- "green" and others. Investors and entrepreneurs would know that U.S. industry will have a secure position, even against "cut-throat" import competition.
It's time for the Obama Administration to examine this bold option and move quickly. Those of us who've been urging are standing by and ready to help. This is a great national opportunity. It's truly a "SILVER BULLET" who's time has come! It's a better answer to China and other mercantilist nations than the protectionist tariffs being urged by some economists now.
If there's any doubt about Mr. Buffett's wisdom, note this AP news item from 4 years ago:
"The American businessman and investor Warren Buffett was quoted in the Associated Press, Jan.20, 2006: "The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil".
Amen! We've surely got political turmoil now!
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