It has been over ten years since I received my master’s degree from Rensselaer Polytechnic Institute, and some issues that were troubling to me back then still trouble me today. I grew up as a child just a few blocks from the long-gone steel mills in Youngstown Ohio. They were closed when I was in my teens due to overseas competition. The results were devastating to the older workers in the area who had the impossible task of being retrained for work in other areas. The problem was twofold: many were well past their prime, and there really was no work to be had in the “other areas”, at that point in time in the community. The word “retraining” sounded good, but it was political fiction. I was lucky to be a young person with an interest in technology. I left the area and joined the military to be trained in very desirable high-tech skills, and took every opportunity that the military offered.
While attending a business class at Rensselaer, I was at odds with proponents of free trade but had a professor explain to me that it was global competition that helped to improve our nation’s products. As an example, back in the 1970s and 1980s if a car had over 50,000 miles on the odometer, it practically belonged in a museum. In today’s world, 150,000 to 250,000 miles is the typical use, and today’s autos are safer and essentially problem free. So, I agree that global trade has benefits, but free trade must be fair trade. If our nation allows products to be imported without prohibitive restrictions, then other nations must reciprocate for the free trade to be fair trade, and this is not the case! Since I wrote a rather important academic paper on the issues approximately ten years ago, things have not changed very much in our favor. The gist of the paper is that our economy is built like a house of cards and a wind is coming. The annual trade deficit has ups-and-downs; at the time of the paper, our nation’s trade deficit was over 716 billion for that year, while according to U.S. Bureau of Economic Analysis, this past year’s trade deficit was at just over 566 billion dollars. In both cases, our nation is going into debt to the tune of over a half-trillion dollars every year, and has been doing so for many years. How long will it take before our credit card is cut off and our assets get repossessed? China has been a large purchaser of U.S. Treasury securities. If you think this doesn’t affect you, think about what would happen to the value of the dollar if they sold off their investments purposely at a loss. (Since originally writing this blog post, the Chinese government has, in fact, significantly reduced its investments in U.S. government securities.)
Many naysayers contend that only inconsequential items are made overseas; take a buying trip to Walmart, Home Depot, or any retail store (including online stores), try to find products made in America… Good luck. Yes, my paper from ten years ago is still relevant as are my concerns today. This ridiculous trade imbalance started happening when I was a teenager, and now I am almost at the point of collecting Social Security. Change is long overdue!