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Health & Fitness

Neither Party Offers a Solution to America's Economic Crisis

As the worst Congress we've had in living memory continues to fail to keep the government open, it is worth standing back to consider the underlying cause of the crisis.

The reason the public debt and government budget deficits have grown out of hand is that over the past few decades America's manufacturing has been off-shored or outsourced.  On September 20, 2011, Manufacturing and Technology News reported that during the previous ten years, the US lost 54,621 factories, and manufacturing employment fell by 5 million employees.  That trend still continues.

The ideological commitment to Free Trade, pursued by the Presidents and Congressional majorities of both parties, and lobbied for by the executives of globalized corporations benefitting from this offshoring, is the underlying cause of this exporting of our jobs and manufacturing capabilities.

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The minority of Republicans that have taken the government hostage, in opposition to the Affordable Care Act and the welfare state generally, might be the most immediate to blame for the paralysis of government.  But the underlying fiscal crisis they point to is real.  The problem is that both parties ignore the chronic $600 billion trade deficits and the Free Trade dismantling of American manufacturing.

That export of our jobs and GDP and tax base is the root of America's economic problems.  That is the source of our fiscal crises at the local, state and federal levels.  That is the cause of the mass unemployment, stagnation of wages, and spreading poverty.

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President Obama and the Democrats have their share of the blame because they offer no solutions.   President Obama is just the latest of a string of Presidents from both parties, joined by Congressional majorities of both parties, all of whom give away our markets and jobs through “free trade” to win geo-strategic alliances and “global leadership” position.  Neither party shows concern for the citizens, both are filled with Free-Traders selling out our markets and jobs to the globalized corporations.  Meanwhile they rally voters by making culture war and offering ideological fights that will never solve our problems.

Our goal should not be any ideological prejudice for big or small government per se, but rather smart government that pragmatically makes policies to promote the development of private sector employment and prosperity.

For example, having the Commerce Department administer a new Balanced Trade policy through Import Certificates would be an additional government operation but would pay off in growing our GDP over 4% annually by promoting many millions of new private sector jobs.  Diverting our trade deficits into demand for US-made goods and services would directly create millions of manufacturing jobs and indirectly create millions more in other sectors through the multiplier-effect manufacturing has.

We do need a social safety net for those who are disabled or temporarily out of work. The way to minimize that welfare expense is to grow private sector opportunities that are better than welfare, not just cut benefits in the context of today’s mass unemployment and spreading poverty.  The extent of the unemployment problem is masked by fraudulent government statistics.  According to John Williams at shadowstats.com, if the federal Bureau of Labor Statistics counted unemployment the way they did until 1994, our nation's official unemployment right now would be around 23%.

The only way our fiscal problems --and the larger underlying problems of unemployment and poverty-- will be solved, is to unite the country around a plan to grow our economy out of the larger economic crisis. Just arguing about big or small government is besides the point, neither of those “plans” will work because both ignore the need for an effective national economic strategy that revitalizes manufacturing as the anchor of all the other sectors. If we lock into ideological warfare over the size of government, the crisis will just deepen and the divisions widen to make our country more ungovernable and the future of our people less and less prosperous.

I say put that whole debate about “size of government” aside for 5 years and concentrate on a new Balanced Trade policy and other policies to grow our manufacturing and other high value-added industries. Once we do that, the fiscal problems will become manageable through expanded tax base and reduced need for safety net. If we don’t revitalize manufacturing, we are headed into third world status and civil wars with no solutions from either side of that useless ideological divide.

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