America is sailing into dangerous economic waters, chiefly due to our massive debts and inability to manufacture competitively. The months ahead could determine the success or failure of the nation’s economic course: will we right the ship—or sink into the history books as another former superpower?
The Dollar Sinking Scenario
America’s fundamental economic underpinnings have been slipping. The indisputable evidence lies in the present devaluation of American currency. Foreign investments are reaching a saturation point. In the past these investments have been used to temporarily prop up our government’s deficits by lending to the Treasury and buying our corporate equities, real estate, and providing jobs to our blue-collar workers.
This will end soon.
Central banks in Asia and the Middle East are overflowing with trillions of U.S. dollars. Few goods are now produced using dollars and fewer investment opportunities remain. (Many of our best U.S. companies have been already sold to foreign purchasers, creating an environment where additional lending and purchases of U.S. goods will require printing ever more dollars, and result in devaluation.)
This devaluation will result in real inflation – higher prices for imported merchandise and commodities. The advantage to American exporters will be real but of little benefit to most in this country since so little of our economy is driven by manufacturing and exporting.The U.S. has been “shooting itself in the foot” as the remaining ownership of companies continues to be our chief export.
Vanishing Industrial Base
Opportunities to produce goods in America have all but vanished; nearly all manufactured goods now come from overseas. The labor force is being quietly redeployed into lower-paying service, retail, hospitality, assembly, or distribution jobs that are transient, do not support communities, careers, or provide benefits.
Even vaunted finance, high-tech, medical, and academia jobs are being pressured by the surfeit of talented college graduates who are dumping their elected disciplines to “follow the money” into these few remaining propitious fields.
Righting the Ship
It’s time to reform our economic policies and priorities.
We must look to the government to help reign in the deficits principally caused by our inability to produce competitively in this country. The solution is to acknowledge the problem, study it and treat it as a national priority, akin to the Manhattan Project of WWII.
To accomplish this we must create conditions that promote profitable manufacturing through incentives, subsidies where needed, and tax law changes. We must also curtail irresponsible consumption and prevent the sale of our best companies to foreign interests, as is done in other successful countries.
The end result should be that it is more profitable to build domestically-owned factories, and to do research and engineering here rather than abroad. With this renewed investment will come “jobs,” tax dollars, pride, and opportunities for all classes.
The transition may be rocky, but if we acknowledge the problem and carefully study the alternatives now, we may be able to right this ship. If we continue to flail about doing nothing, we cannot hope to avoid drowning in the tidal wave of misguided policy and foreign competition that has been building for decades.