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issue: September 2008 APPLIANCE Magazine

The Open Door
U.S. Must Prepare for Day of Reckoning

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by Jack Davis, founder, 1 Squared R Element Co.

Are predatory trade policies putting American manufacturing at risk? One executive thinks so.

Asian leaders that dupe our leaders and take advantage of our free trade policies with their predatory trade policies are draining the United States of its economic wealth.

Cheap labor, the visions of large markets, and the greed for profits have seduced our transnational corporate owners and managers. They outsource labor, capital, technology, R&D, manufacturing know-how, and trade secrets. They have and are continuing to dismantle our wealth-producing industries. These owners and managers have no loyalty or allegiance to the United States.

America had a total trade deficit of $712 billion in 2007. With China, the trade deficit was $256 billion—the largest ever with a single country. Consumer products such as computers, televisions, appliances, housewares, heating, cooling, and lawn and garden equipment—formerly mainstays of American manufacturing—have been replaced by a tsunami of brands made in China or other Asian countries. Products from companies whose names have long been synonymous with American ingenuity and manufacturing are now carrying the “Made in China” label. We have lost complete industries to free trade. Will the appliance industry be next?

Trade is necessary for America to prosper, but it must be balanced trade. The country’s total national debt is $9 trillion. About $5 trillion is owed to foreign countries, and $1.3 trillion of that is owed to China. All three numbers are pointing to an economic crisis.

A nation with a large trade deficit is similar to a person living above his or her means. If you have a successful career but lose your source of income (a job), you still may have credit available on credit cards and ownership in your home and car. Thus, you can continue to maintain your standard of living (for a while) by increasing debt on your credit cards or refinancing or selling your home and car. But just as a person cannot continually increase debt, neither can a nation. The key difference between a nation and a person is that a nation can print money and delay the day of reckoning.

The U.S. dollar in the last seven years has lost more than 50% of its value in relation to the euro and will continue to decline in value. In addition to the $5 trillion America owes foreign countries, they also own or control more than 8000 U.S. companies with a value of over $8 trillion.

When blindly following the ideology of free trade, many Americans fail to see the connection and damage caused by the predatory trade policies that result in huge trade deficits and a huge national debt—a portion of which is owed to foreign countries. Most Americans believe the country is a superpower. However, it is only the military that is a superpower. The economy is second- or third-world class.

China also promotes exports and discourages imports. They keep wages low, rebate value-added taxes on their exports, and charge value-added taxes on imports. They counterfeit and steal copyrights, trademarks, and patents. They provide domestic industries with local tax incentives, offer special financing, and charge tariffs on imports. They target specific industries to monopolize. No U.S. company can compete with these predatory practices. All of the above violate the World Trade Organization (WTO) regulations.

The U.S. Constitution states: “Congress shall have the power to regulate commerce with foreign nations.” But Congress gave control of foreign commerce to the WTO. Congress must do what the people elected them to do, and what they were sworn to do.

Congress must immediately cancel the United States’ membership in the WTO. If they don’t, Asian countries will continue their predatory trade practices, continue destroying or buying U.S. companies, continue financing America’s debt, and continue buying the country. They will do this until the United States has nothing left to sell—no industries, no real estate, and no natural resources.

The career politicians sent to Washington still don’t see or understand the coming economic crisis. Neither presidential candidate seems to be aware of the coming economic crisis.

Wake up America, your day of reckoning is coming.

About the Author

Jack Davis is the owner and founder of the I Squared R Element Co., an Akron, NY, U.S.-based manufacturer of silicon carbide and molybdenum disilicide heating elements. If you wish to contact Davis, please e-mail lisa.bonnema@cancom.com


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