Will democracy survive the debt and dependence it fosters?
This generation of Americans has been witness to one of the most stunning declines of a great power in the history of the world.
In 2000, the United States ran a surplus. In 2009, it ran a deficit of $1.4 trillion-10 percent of the economy. The 2010 deficit was almost equal, and the 2011 deficit is projected even higher. The national debt is surging to 100 percent of GDP, portending an eventual run on the dollar, a default, or Weimar inflation. The greatest creditor nation in history is now the worlds greatest debtor.
In the first decade of what was to be the Second American Century, a net of zero new jobs were created. Average households were earning less in real dollars at the end of the decade than at the beginning. The net worth of the American family, in stocks, bonds, savings, home values, receded 4 percent.
Fifty-thousand plants and factories shut down. As a source of jobs, manufacturing fell below healthcare and education in 2001, below retail sales in 2002, below local government in 2006, below leisure and hospitality, i.e., restaurants and bars, in 2008-all for the first time.
In April 2010, three of every four Americans, 74 percent, said the country is weaker than a decade ago, and 57 percent said life in America will be worse for the next generation than it is today.
Who did this to us? We did it to ourselves.
We abandoned economic nationalism for globalism. We cast aside fiscal prudence for partisan bidding for voting blocs. We ballooned our welfare state to rival the socialist states of Europe. And we launched a crusade for democracy that has us tied down in two decade-long south Asian wars.
In 2009, Paul Volcker, former chairman of the Federal Reserve, told Congress the cause of the grave financial crisis was trade-related imbalances. Pressed by Sen. Chris Dodd, Volcker added, "Go back to the imbalances in the economy. The United States has been consuming more than it has been producing for many years."
For decades, Japans trade surplus with the United States was the largest on earth. In the 21st century, Chinas trade surplus with the United States began to dwarf Japans. In 2008, China exported five times the dollar volume of goods to America as she imported, and her trade surplus with America set a world record between any two nations-$266 billion. In August 2010, Chinas trade surplus with the United States set a new all-time monthly record, $28 billion.
Nor was it all in toys and textiles. In critical items that the Commerce Department defines as advanced technology products (ATP), the U.S. trade deficit with China in 2010 hit a record $95 billion. China today has the trade profile of an industrial and technological power while the manifest of U.S. exports to China, aircraft excepted, reads like the exports of the Jamestown Colony to the mother country.
What was the impact of this tsunami of imports on employment? During the first decade of the 21st century, US. semiconductors and electronic-component producers lost 42 percent of their jobs; communications-equipment producers lost 48 percent of their jobs; textile and apparel producers lost, respectively, 63 percent and 61 percent of their jobs.
At every election, politicians decry Americas deepening dependence on foreign oil. But the U.S. trade deficit in manufactures, $440 billion in 2008, was $89 billion larger than the US. deficit in crude oil. Why is a dependence on the oil of Canada, Mexico, Venezuela, Nigeria, Saudi Arabia, and the Gulf a greater concern than a dependence on a rival power for computers and vital components of our high-tech industries and weapons systems?
As Auggie Tantillo, Executive Director of the American Manufacturing Trade Action Committee, argues:
Running a trade deficit for natural resources that the United States lacks is something that cannot be helped, but running a massive trade deficit in man-made products that America easily could produce itself is a choice-a poor choice that is bankrupting the country and responsible for the loss of millions of jobs. …