The Tally Stick

Taking measure in our times

American’s : Are we Consumers or Producers?

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We are now in the middle of the greatest financial crisis since the Great Depression.  After much review of the facts, debt and leverage are at the core of the problem that helped lead us to this point.  During this process since the deregulation in the 1980’s the savings rate in the U.S. declined until we as a whole were net borrowers to the rest of the world with most of that new debt going to oil producing countries, Japan and China.

A majority of our Gross Domestic Product (GDP) is based on consumption.  Our current public debt is officially over $12 trillion dollars with our ratio of debt to GDP over 80%.  In the media we keep hearing American’s referred to “consumers” in every report.

They tout us as a “serviced-based economy” which sounds friendly but in effect it is a cover for the fact that we have let light-manufacturing get incentivized and outsourced to low-wage countries while we let the finished products brought back the the United State to not only provide “cheap” goods but also made native producers uncompetitive unless they did the same.  But these goods were not cheap other than in price.  They actually had a very real cost to the economy and a large reduction in jobs that traditionally provided jobs that we considered “middle class”.

It is illogical to think that we can reduce our production to a few sectors of the economy and a majority everyone else would have “service based” job, but the question is who are they going to serve?  Are we satisfied with an economy with this concentration of wealth were we have people serving a smaller portion of the population that has the wealth to afford all these services from flipping burger to being a real estate agent or attorney?  There is only so many of these jobs a growing and opportunity-driven economy can have and still provide a normal standard of living that this country has provided through its laws that protect our basic rights to liberty and property.

We have seen a rising standard of living in America and that is undeniable with the flood of cheap goods and services we enjoy.  The problem is that all of these goods and services require “income” to support their demand.  But as a country we are allowing our jobs to get outsourced under the guise of “free trade” which is not free in the fact that we have unlimited access to other markets but more all other countries have unlimited access to our market.  I do support free capital flows but some form of protectionism is not all that bad if it is focused on U.S. based multi-national corporations that use “free-trade” to dump good on the U.S. with their focus on the bottom-line and not the national goal of employment.  Our system is eating itself and it will not end good if we do not start being vocal about this issue.

We need to start focusing on producing good in the U.S. that not only the world needs to help us balance our flow of trade but also goods that our own domestic market has a demand for.  We also need a push of education to the American people about the “real cost” of these cheap goods so they understand that the price is not the only factor to base a purchasing decision on.  Supporting companies that are foreign or domestic that produce in America are good for our situation and provide jobs that bring the income we need to support our businesses that deperately need the help.  We can’t rely on the government to take this issue on and provide a solution until we get educated and start engaging them and explaining this “service-based” economy is a front for gross profiteering and we need laws that bring native and foreign producers on a even footing so we go from “free-trade” to “fair-trade” which is good for everyone.

Written by Tally Stick

December 13th, 2009 at 10:06 pm

Posted in Commentary

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