Trade Agreements & Political Half-Truths

Did you know that the last time the U.S. had a “Trade Surplus” ($12.4 Billion) was 1975?  By 2015 the Federal Trade Deficit, for just Fiscal Year 2015, was $539.8 Billion. Did you know that since 1992, when the WTO (Trade Treaties) was passed and thru Fiscal Year-End 2015 the Cumulative Trade Deficit was $10.2 Trillion and over the same period Federal Debt increased by $14.1 Trillion?

If you suspect a correlation between Trade Deficits and Federal Debt then you should run for Office and give Kasich, Rubio, Cruz, Bush and nearly all of the 435 Members of Congress their pink-slips! To say they haven’t an economic-clue as to the effects of their so-called Free-Trade Agreements is a complete understatement and yet they frequently make political promises that are as completely unpromising as they are totally ignorant.

To say that Trade Agreements, as the numbers prove undeniably, have been disastrous is only part of the explanation. What is far more important is if this ignorance of the pure economics these disasters represent is also the foundation upon which they base their solutions then an even far more devastating outcome is sure to occur. A couple of quick points to consider:

The U.S. cannot Freely-Trade services for physical product and expect to be economically solvent.

Think of it this way; in economic/dollar-terms, Apple may design the iPhone, but which is more valuable? The design or the millions of iPhones (and its derivatives) produced and sold? Remember, the design (and even its subsequent upgrades) are events that occur only once. Additionally, which is more valuable to the U.S. Economy? The scrap steel sent off to Asia for reprocessing or the processed steel that comes back into the U.S.? Don’t just think of the product itself, but also all of the collateral industries supported by Steel Production and the associated technologies developed and trades supported. Did you know that of all the Automobiles “assembled” (mind you, not “manufactured”) here in the U.S. (regardless of name-plate) barely 38 percent of their components are “sourced” from inside the U.S.?

It is estimated that since 1992 the U.S. has suffered nearly 6.3 Million middle-income job losses in key technological, industrial, machining, manufacture and trade segments. It’s quite disingenuous for Kasich, Cruz, Clinton & Sanders to simultaneously talk about Trade Agreements and Bringing Jobs Back to the Nation as if it were just a matter of a change in the direction of Economic Policy; it’s far more than that. It is quite achievable, but you must first understand the problem before you can plot a course correction and I’ve seen no indication in their rhetoric or in their historical archives, that they’ve even a dust-sized particle of capacity required to accomplish any of what they pitch to the public.

It’s not just about changing the IRS Tax Code but using the Tax Code to incentivize domestic economic development and you do this not by Tax Giveaways (which burden the Public), but by scaling the Tax Rates in such a way as to force Companies to propagate domestically. It’s not just about Changing Regulations but more so about using the Punitive Measures of the Legal Process (and not the legislative process) to force Companies to be environmentally prudent or socially responsible; trust me, if you were to hold a CEO of a Company responsible for a product defect and let him/her spend 5 years behind bars with their new best friend Bubba you’ll be amazed how quickly Corporate America becomes environmentally and socially responsible.

It’s about restoring order to the U.S. Financial System (Banks & Markets) and eliminating their self-monitoring of the System-wide Casino. If we do this you’ll witness a rapid turn-around in domestic economic investment.

Last point: The concept of Free-Trade has become nothing more than a tool for camouflaging the ambitions of a Political-Financial Elite who have long sought the financial and economic consolidation of the planet. True, for some, there is an argument that might make this notion quite, and peevishly so, optimistic and ideal however, there are two major and insurmountable obstacles:

(1) It is both mathematically and logistically impossible and this is due, in large part to the following:

(2) All durable economies are only and ever local. Attempting to have these two components persist simultaneously or even to state that it is implicitly possible is, itself, patently absurd. You needn’t take my word for it; just look around your Country.  

Curtis C. Greco, Founder

 

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