When I was a kid, I used to get into marble games with other, sometimes older kids. Often, I lost badly, and would pick up my remaining marbles and go home, sadder and not much wiser. I never mastered the game, and my future with marbles was grim, and hasn’t changed to this day.
America may be in a similar position with regard to manufacturing and the global markets – in a losing game. Most of our manufacturing has left us for sunnier shores, and our companies are saddled with the highest corporate taxes in the world, as well as nearly the highest labor cost. (It’s hard to obtain comparison figures, but the world’s highest labor cost in manufacturing probably goes to Norway or Denmark.) Entire industries have left the United States. See my “Balance of Trade” page for the relevant details.
Perhaps an entirely new approach is needed. I have one which most people will dismiss out of hand, unless and until they give it real consideration:
Block imports of all manufactured goods, including those made overseas by American firms. Allow foreign companies to form stock corporations, with at least 10% American ownership, in the United States, and allow them to manufacture goods here, providing that no less than 85% of the employees of the firm are U. S. citizens.
What would this do? Manufactured goods prices would rise, of course, but we would begin to see our own plants manufacturing again. We would see an explosion of new manufacturing and consequently, greatly increased employment in this country. This would help us once again be the most powerful economy on the planet.
The balance of trade problem would be greatly reduced. We’d still have oil imports to pay for, but that’s a problem we need to fix whether or not we cut off imports of manufactured goods.
This is a radical change, and we’d see negative consequences as well:
- Environmentalists would be outraged. They would worry about emissions and global warming, increased power use, and on and on. We should insist that new plants be built with environmental safeguards, where possible.
- Other countries might reciprocate, and/or retaliate against trade with us. Big deal.
- Some of our companies might lose significant external sales. For example, GM sells a lot of cars in China; if China cuts off imports from us (retaliating), GM would hurt, and there would be some loss of jobs.
- There are those who believe America exists primarily to support Third World countries. They too would be outraged that we did something so selfish. But, our primary objective should be to optimize conditions in this country.
- The shipping and port-related industries would take a hit. We’d be importing a great deal less – just raw materials.
- China’s economy might collapse, and they might start a third World War with us. There are all kinds of doomsday scenarios we could imagine, but we get a lot of those as a result of just living.
We couldn’t implement this all at once. There would be a need for a transitional period, allowing time for manufacturing capabilities to be built up. I suggest increasing tariffs, in several steps, gradually reducing imports and leading up to the final cutoff. A reasonable time might be two years. We could also do it with decreasing goods quotas rather than tariffs.
I haven’t seen anyone advocating this idea, but I believe in it, and I’d really welcome comments. Or at least, intelligent ones.