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Health & Fitness

How to Create Millions of Jobs and Restore Manufacturing

A True Silver Bullet - Create Millions of Secure Jobs and Restore U.S. Manufacturing Without Deficit Spending

By Kenneth N. Davis, Jr., Former U.S. Assistant Secretary of Commerce 

How many times have we heard "There's no fast way to restore our industrial economy and its good jobs! It will take years of planning and investment in “green industries” and other technologies.  A whole new world of global competition is causing the problem!"                   

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To be blunt, that's nonsense.  The trouble in our domestic industries began years ago in the early 1970's under President Nixon.  Wide-open free-trade policies were adopted to help our multinational companies gain easier access to foreign markets.  Our long-held practice of having a positive national balance of payments with the rest of the world was stopped.

Global opportunities were seen as more important than our own rich market.  But other countries, notably Japan and China, adopted mercantilist policies aimed here.  By choice or inattention, the U.S. abandoned our home market to lead in globalization.

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The Trade Deficit chart above shows the disastrous results.  As we lost market share here, we also lost thousands of companies and millions of jobs.  Our trade deficits grew beyond any amounts economists had imagined possible!

But there's a bold, fair way to repair this grave mistake in national policy with minimal government deficit spending needed.  In late 2003, the American businessman and investor Warren Buffett wrote a cover story for Fortune Magazine, with a lead-in stating "Our trade deficits are selling America out from under us.  We've got to fix it now, and here's how to do it."  Then came the "silver bullet."  He said, "We should make balanced trade the law-of-the-land and enforce it by permitting total annual imports only to match our exports.  Import Certificates ("ICs") would be issued by the U.S. and offered to all comers in an open market."

To use 2013 figures, our total exports were running at about $1.6 trillion.  By limiting imports to that amount instead of our actual $2.4 trillion, we'd still be providing a huge market for all other trading nations – about 10% of the world’s total imports.  That’s “fair market sharing”, not protectionism!!

And the difference between $2.4 and $1.6 trillion, or about $800 billion in sales, would revert to U.S. companies and workers. How many jobs would be created?  Fred Bergsten, CEO of the Peterson Institute, estimated that each $1 billion in new exports creates 7,000 jobs.  Using that same figure for production, $800 billion in additional U.S. domestic industry business should add about 5.6 million new jobs here!  And It would stimulate even more growth and good jobs as our industry recovers aided by the surge of new business.  

If the Buffett Plan had been adopted in 2004, soon after its proposal, we'd have at least 8 to 10 million Americans back at work.  In addition, we’d have established a market sharing policy that would be crucially important for creating new industries – “green” and others.  Investors and entrepreneurs would have real assurance that U.S. industry will have an assured home market position with limits on excessive and unfair import competition.

It's time for the Obama Administration to examine this bold option closely and then move quickly.  Those of us who've been urging action are standing by and ready to help.  This is a  great national opportunity.  It's really a "silver bullet" whose time has come!

Warren Buffett was quoted in the Associated Press, Jan.20, 2006: "The U.S trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to political turmoil."

We certainly have “political turmoil” today!  Let’s take strong action to fix it now!

Kenneth N. Davis, Jr.

Balanced Trade Associates.

Stamford, CT

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