The whole issue of being able to answer economics questions is something every American should be able to deal with even at the high school level. There is no need to have an undergraduate degree in order to discuss or answer important objective questions of economics.
Unfortunately, the issue of discussing economics has gone the way of the dinosaurs and today most Americas get their information from sound bites or from people who have never run a real business accountable for a real payroll.
The purpose of this section of my website is to present some common sense principles and ideas on the topic of economics as presented by John V. Westberg, President of New Hope for America. John has a owned and operated a business for many years and knows how to grow a business as well as how international business actually works and I would like to share some of his common sense ideas as it relates to correcting the American economy.
The rest of this page and other articles are being presented with his permission.
Under President Obama, regulations and related costs have expanded drastically. On top of this, President Obama and the Democrats are trying to significantly raise taxes on business and the investing class of Americans. All of this will obviously put a further damper on any hope for an economic recovery. You can't take money "out" of the consumer economy and expect it to grow, it just won't happen.
It seems only common sense that if wee get rid of all of President Obama's disastrous anti-growth regulations and spending, and cut taxes, that our economy will be on the path to recovery. We will be getting back to the basic principles of capitalism and the free market like President Reagan did.
Every American should be asking of their elected officials as many economics questions as possible. If their is one thing that we all have in common is that we all need jobs. If our elected officials have no practical experience in the business sector then this should be of tremendous concern to each of us.
It's not all Obama's Fault
Before we put all the blame for our economic troubles on Obama, we need to look back over the last 30 years and look at what has been happening to America's manufacturing base. Looking back even further to 40 years ago, America's manufacturers were the powerhouse of the world. Most everything sold in the world was made in America, and, on top of this, we had a fair sized trade surplus.
This healthy manufacturing base was providing the economic "fuel" to run our economy. Manufacturers were bringing the money "in" to their local economic communities from their customers around the world, while retailers were sending money "out" to manufacturers in America to buy more products to sell.
The government was a passive participant as it took income tax money from workers and their employers. We basically had an economy in "perpetual motion", with no need for any government stimulus money.
Today, however, with our massive trade deficits and lost manufacturing jobs, we now need continual infusions of government "budget-deficit" money, called "stimulus" money, just to keep our economy limping along. We now have a "government-funded" economy. People are cashing government-funded checks instead of manufacturing payroll checks.
Our next questions in this series of economics questions is what will budget-cutting accomplish?
Budget-Cutting will Depress the Economy
With today's "government-funded" economy, any cuts in government spending, other than cuts in foreign aid, and big bank "bailouts", will cause a further depressing of our economy. This would cause a further reduction in tax revenues, which could possible cause an increase in the budget deficit. The anti-growth budget-cutting policy, being promoted by the GOP will have a seriously negative impact on the U.S. economy...something the GOP needs to consider before they get too far along with their budget-cutting.
So who is the culprit?
About 40 years ago our government decided that free trade should be the guiding principle for all of our nation's trade relationships. This effort to remove or reduce any barriers to trade such as tariffs and/or quotas brought a deluge of low-cost imports to the store shelves of America.
Of course the U.S. consumers were quick to "join in" on this great new buying opportunity. This, of course, set up a situation where the stores were competing to see who could find more sources of these new low-cost products. As more and more of the store's purchase orders were being sent to Asian manufacturers, fewer and fewer "orders" were going to the manufacturers of America. Result...lost jobs.
As you can from what's been presented so far, the basic culprit in this troublesome situation was our government's placing of free trade "on the back" of capitalism. As long as wages in China are drastically lower than the U.S. manufacturing wages, most U.S. made products can not be competitively priced. As a result, as long as we continue to allow free trade to "ride on the back" of capitalism, retail's restocking orders will continue being sent to China and our "jobs" situation will not be turned around.
Another one of many possible economics questions to be presented is, what about placing tariffs on all imports to get "orders" to come back to the manufacturers in the U.S.?
Of course, the only way to get this to work is to have tariffs high enough that the prices for foreign products to the stores in the U.S. would be just as high as the U.S. made products. U.S. consumers would never stand for this, and we would likely have worldwide tariff wars.
Capitalism in America can not survive as long as we allow free trade to "ride on it's back". As much as the GOP does not want to admit this, it is still an economic fact that our "free-trade-burdened" system of capitalism will not survive. If you disagree with this, what are you suggesting we do to get the "orders" to come back to manufacturers in America? Without this, our economy and our system of capitalism is on the way down.
Sounds hopeless doesn't it? So what's the next of the many economics questions we should be asking?
Capitalism has been the cause of the "economic opportunity" that built America. It opened the door to the creative power of America's entrepreneurial genius. It also produced the largest and wealthiest middle-class that the world has ever seen. It did this as our country developed, and it could do this again if we only removed the unworkable burden of free trade from it's "back".
The big question is how can we continue growing world trade and helping third world countries develop if we get rid of today's version of free trade? Is there another trade policy that could replace today's trade barriers, grow international trade, and yet allow a "set-free" capitalism to survive and to revive our economy? Yes there is.
The New Hope for America Foundation has developed a new trade policy concept. It would permit the U.S. to unilaterally eliminate all tariffs, provide a level-playing-field for all U.S. manufacturers, increase jobs in the U.S., increase U.S. exports, and increase tax revenues at all levels of government, all without the need for any government stimulus money. All nations could also apply this same concept without any serious detrimental effect to world trade.
This new trade policy would truly be a pro-growth solution to revive the U.S. economy. Also, by eliminating all tariffs, we would be moving the global economy, in a significant way, towards a free-market economy.
You can find out more about these exciting new ideas by viewing our foundation's three videos and several short papers accessible on our website, www.newhopeforamerica.org
John V. Westberg, President
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