Will Obama’s $447 billion plan work? (September 2011)

The jobs plan WILL work.The President’s stimulus program will certainly put more money in our hands, which we can spend buying goods made in China and elsewhere.  It will give the Chinese lots of work, and make US and Chinese companies wealthier.  For the average American worker, however, it will be a short lived party, because while he will be able to spend more in the short run, the spending will have to be curtailed as the stimulus runs out.  And when the economy weakens again, perhaps the President will propose yet another program that will give jobs to the Chinese, line the pockets of the US corporations and bring more impoverishment to the USA. 

To create jobs in America, what we need is an active policy of import substitution.  We cannot afford to continue to buy from everyone while no one buys from us.  We run a trade deficit of about $600 billion per YEAR.  That means that we buy $600 billion more in goods and services from foreigners than they buy from us.  Think about the implication of this: the trade deficit is nearly fifty percent larger than Obama’s $447 billion plan.  Eliminating the trade deficit would create lots of jobs in the US.  Isn’t that what we want?  So, what is stopping our leadership from putting into place an import substitution plan?

For one, the politicians don’t listen to me.  They listen to the fat cats who write the huge political contribution checks that I can’t write.  They listen to the heads of companies like Apple and HP.  Where do all these companies manufacture their goods?  China, India and so on--not in America. So, what’s good for the fat cats is certainly not good for the working men and women of America.

The Chinese do their part to keep us poor.  They have a great interest in our continuing to buy from them, so they keep their prices low by manipulating their currency, not allowing unions, etc.  And we do nothing about it.  It is time they let the market forces determine the price of their currency, which will surely lead to an appreciation and thus make their goods more expensive to us, and our exports cheaper to them.  In sum, we will buy less from them and they will buy more from us.  Seems fair to me.

Of course, an import substitution policy is no panacea.  There is a cost to us.  That is, we will need to reduce our materialistic standard of living. Here’s an example: I just bought a 55 inch TV for $1,500 in Costco, made by the Samsung, which I suppose was manufactured in Korea.  No US jobs were created by my spending.  However, if we had an import substitution policy in place, I would have had to spend the same $1,500 but that money would have bought me a 36 inch TV made in America, by American workers.  This would have put more of my fellow Americans to work, but would have reduced my standard of living. What do you prefer: a smaller TV and work, or a larger TV and less work?  That’s the price we pay for an active import substitution policy.

I believe it is time we eliminate our trade deficit and create the jobs in America that will allow us to grow on a sustainable path.  Put up trade barriers, depreciate the value of the dollar or tell the Chinese to stop manipulating their currency in their favor.

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