Household Net Worth Plummets in 3rd Quarter

December 12, 2008

http://www.cnbc.com/id/28178572

The Federal Reserve reports that household net worth declined 4.7% in the 3rd quarter of this year, the fourth consecutive quarterly decline.  Also, household debt declined for the first time in history, not because people are cutting back on borrowing, but because foreclosures are erasing mortgages from the household debt column. 

The real story is that this represents an acceleration of a three-decades-long decline.  Median household net worth is now lower than it was in 1976 which, not coincidentally, was the first year in a 33-year long string of consecutive trade deficits. 

And, in 1976, the per capita share of the national debt was only about one third of each person’s net worth.  Today it far exceeds it! 

Others, who are satisfied with superficial analysis and explanations, will tell you that this is all due to the credit crisis which, once fixed by the government bail-outs, will put us back on a path to prosperity.  Bull!  This is clear evidence of the consequences of the economic collision I’ve warned of in Five Short Blasts – the rising unemployment and poverty caused by the collision between falling per capita consumption (exacerbated by free trade with grossly overpopulated nations) and rising productivity. 

There will be no end to our decades-long economic decline until we stop treating symptoms and get to the root cause – the effects of worsening overpopulation, both imported and home-grown.


Boycott Alabama Now!

December 12, 2008

http://www.boycottalabamanow.com/

Readers, here’s a link to a new web site by a retired auto worker.  He put up this site in response to Senator Richard Shelby, senator from Alabama and ranking Republican on the Senate Banking Committee, who with the support of a few other southern senators, killed the assistance plan for the auto industry.  Unless President Bush intervenes by freeing up TARP funds to help the automakers, Senator Shelby may very well have played the role of “Doctor Kevorkian” in assisting the suicide of the American economy. 

Once you get to the site, click on the “take action” tab.  There you will find instructions for contacting Senator Shelby and the Alabama Chamber of Commerce.  I’ve already done so, informing them of my disappointment with Senator Shelby and my support for the boycott. 

It’s time to start exercising our economic clout to punish those who champion the destruction of American jobs and wages.  Please join me in supporting this cause and forward links to your friends and relatives.  Encourage them to support it as well. 

Thanks.


Weekly Jobless Claims Soar Again

December 11, 2008

http://www.reuters.com/article/newsOne/idUSTRE4BA3EZ20081211

Weekly jobless claims have soared again to 573,000.  That’s an annual rate of almost 30 million workers, or 22% of the labor force, losing their jobs every year!  The pace of these layoffs is breathtaking and accelerating at the very time of year when job gains are usually their strongest. 

It’s worth noting that, at the peak of the Great Depression in 1933, unemployment reached 25%.  While our official unemployment rate is currently only 6.7%, the way that figure is calculated has been revised many times since  1933, making the data appear better than it is.  Many economists point out that, if we include everyone who is looking for work, has given up looking, or has taken part-time jobs for lack of anything better, unemployment is actually more like 12-13%.  And it’s climbing fast.

This data is a very bad sign that the economy is deteriorating rapidly and that the unthinkable – a depression – is becoming a stronger possibility with each passing day.


Defying Economists’ Forecasts, Trade Deficit Rises Again!

December 11, 2008

The Census Bureau moments ago released the international trade results for October and, in spite of economists expectations for a significant decline from $56.6 billion to $53.5 billion, the deficit actually rose to $57.2 billion!  This raises the cumulative trade deficit since 1975 (the year of our last trade surplus) to $9.2 trillion. 

How can this be?  The dollar is falling.  Consumption is down.  Even oil prices have declined dramatically.  All of these were factored into economists’ thinking that it would begin to yield some good news on the trade deficit. 

None of this is any surprise to me.  I have been saying over and over and over that the trade deficit has nothing to do with currency exchange rates or over-consumption or America’s competitiveness.  It has everything to do with the gross disparity in population density between the U.S. and so many of our trading partners like China, Japan, Korea, Germany and others.  Granting these nations free access to our market in return for access to markets stunted by over-crowding and low per capita consumption guarantees a trade deficit.  It’s tantamount to economic suicide.  The only way to stop this is with tariffs. 

America has been the village idiot of globalization, played for suckers by parasitic economies who prey upon the American market to sustain their bloated labor forces.  It’s the direct cause of our economic melt-down.  New thinking on trade policy is long overdue.


The Sell-Off of America: With Ownership Comes Control

December 10, 2008

Free trade cheerleaders casually dismiss concerns about a trade deficit. “No need to worry,” they reassure us. “All that money is reinvested back in America!” With a patronizing smile on their faces, they pat us on the head and send us off like little children, too unsophisticated to understand the complexities of trade and globalization. They are very much like the accountants at Enron.

 What they’re talking about is the way in which the trade deficit is financed. Yes, all that money returns to America because, ultimately, America is the only place where dollars can be spent. So those dollars come back to purchase various investments, of which there are several kinds: U.S. treasuries, stocks and bonds in publicly traded companies, equity in private companies, and direct investment in the construction of factories and other facilities. The latter category is the only one that actually creates jobs, and such investments are quite small. The vast majority is spent on treasuries, stocks and bonds. In effect, we are selling off American assets to finance the trade deficit.

In the past, I’ve warned of a sinister consequence of this sell-off. (See “The United States Corporation.”) With ownership comes control. As an ever-greater percentage of America falls under foreign ownership, our owners gain more control over our companies and our public policy. I think we’re seeing a perfect example of the latter playing out in the debate over the auto industry rescue plan.

Isn’t it interesting that all of the foreign auto manufacturers have concentrated their assembly plants in the Southeastern states? Every time a new plant is proposed, every state has competed vigorously for the business, yet they end up in a Southeastern state without fail. Is it mere coincidence that they have located where the “Big Three” are not? They knew that by relentlessly attacking the American market with more and more brands, while virtually barring the export of American cars to their own markets, GM, Ford and Chrysler would eventually be driven to the point of needing the government’s help. Now that that time has arrived, we can see how their strategy is paying off with the influence they’re exerting through their block of southern senators, preventing any rescue of the domestic automakers. A whole block of senators, bought and paid for by Japanese, Korean and German automakers, has been turned against the best interests of the American economy, workers and taxpayers in a clever plan to destroy the industry and achieve total market domination.

Take away the Big Three and watch what happens to wages in those foreign plants as millions of additional workers are unleashed to compete for those jobs. Take away the competition of GM, Ford and Chrysler and watch the price of foreign cars soar. And with unemployment high back home, there will be great political pressure to shut down American operations and bring those jobs back.

If they successfully block the rescue of the domestic auto industry, Senator Richard Shelby of Alabama and his fellow stooges of the foreign automakers may be remembered as the traitors who kicked the American economy off the cliff and drove us into the 2nd Great Depression. But, of course, they’ll be hailed as the heroes of free trade and globalization.


Obama Confirms Climate Change a National Security Issue

December 10, 2008

http://www.reuters.com/article/environmentNews/idUSTRE4B86R920081209

Eight days ago, following Obama’s roll-out of his national security team, I wrote a post about the seemingly strange mention of climate change on a couple of occasions, and speculated that this meant the issue of climate change was being elevated to a national security issue.  (See “Hints of Hopeful Signs in Obama’s Press Conference.”)  As much as I scan the web for commentary on these kinds of things, I don’t think anyone else picked up on this nuance in that press conference. 

Does this mean that climate change, energy and food have been elevated to national security issues in this upcoming administration? And doesn’t talk of energy and food in terms of “shortage” and “scarcity” imply an understanding of the supply / demand relationship for these resources – an understanding that demand is at least part of the problem?

Now, in this linked Reuters article, we get confirmation from Obama himself that, in fact, this is exactly the case – he considers climate change a matter of national security.

“This is a matter of urgency and of national security and it has to be dealt with in a serious way. That’s what I intend my administration to do,” Obama said.

This is very good news!  No intelligent person (and Obama is very intelligent) who accepts that climate change exists and is caused by human activity – that is, by the burning of fossil fuels and the resultant CO2 emissions – can believe that the problem can be solved while allowing our population to grow unchecked.  I’m not saying that Obama has yet reached this realization but, once his staff gets down to the nuts and bolts of how to accomplish their objective, they will quickly run into the population growth wall.  It’ll be very interesting to see how Obama then reacts to this new reality.  Will he rein in immigration?  Will he begin to ponder the need for incentives for people to choose smaller families? 

The article goes on to mention that Obama sees tackling climate change as another opportunity for creating jobs.  No doubt, there will be a tremendous amount of work involved in converting our electrical generation to new technologies and in transitioning our home heating from oil and gas to more climate change-friendly technologies.  This is an example of the kind of thing I hope Obama has “up his sleeve” when he spoke recently of his economic stimulus plan, but seemed to come up short on jobs.  (See “Obama Jobs Plan: Please Tell Us There’s More.”)

It’s going to be exciting to see how all of this unfolds, as it appears that enormous changes for the better are finally in store for America!


GM Betrayed Consumers? Or Vice Versa?

December 9, 2008

http://www.reuters.com/article/newsOne/idUSTRE4B738W20081208

Hoping that some humble pie might grease the skids for the auto rescue plan in congress, GM has purchased full-page ads in which it basically throws itself at the mercy of voters, hoping to blunt some of the criticism of the deal. 

General Motors Corp on Monday unveiled an unusually frank advertisement acknowledging it had “disappointed” and sometimes even “betrayed” American consumers as it lobbies to clinch the federal aid it needs to stay afloat into next month.

“While we’re still the U.S. sales leader, we acknowledge we have disappointed you,” the ad said. “At times we violated your trust by letting our quality fall below industry standards and our designs became lackluster.”

The unsigned open letter, entitled “GM’s Commitment to the American People” ran in the trade journal Automotive News, which is widely read by industry executives, lobbyists and other insiders.

“We have proliferated our brands and dealer network to the point where we lost adequate focus on the core U.S. market,” the ad said. “We also biased our product mix toward pick-up trucks and SUVs.”

Frankly, this makes me sick.  Has GM made some mistakes?  Of course.  Every company does.  So do the foreign automakers.  But let’s look at the facts.  Did GM’s quality fall behind?  Yes, back in the ’70s, they produced some pretty poor vehicles.  The Vega and Chevette come to mind.  But people forget that, at the same time, the offerings coming out of Japan were little better.  Now GM’s quality is world class.  The Buick brand is at the top of the heap.  Yet, the “poor quality” image remains.  Meanwhile, Mercedes is still perceived as a top quality brand in spite of its quality ratings sinking to rock bottom.

Back in ’75, wanting something cheap and fuel efficient, I eschewed the Vega and Pinto offerings and bought a new Toyota Corolla.  It ran great and got great gas mileage.  But it required a complete tune-up every 15,000 miles and, in spite of being professionally rust-proofed when it was brand new, it literally rusted out from beneath me by the time it was six years old.  I swore I’d never buy another.  More recently, Toyota had a terrible problem with engines burning up early due to undersized oil passages.  Yet there was barely a whisper of  it in the press and Toyota’s “quality” image was left untarnished. 

Have GM’s designs become “lack-luster?”  Yes, you could say that about some models.  But no one would call a Corvette or any Cadillac “lackluster.”  And Corvette outperforms virtually any other sports car on the market at half the price of many of them.  I don’t think anyone would call the Pontiac G6, the Pontiac Solstice, the Saturn Sky, the Saturn Aura or  the Chevy Malibu “lackluster.”  And the quality of these cars is the equal of anything coming out of Japan.

Did they “proliferate” their dealer network?  Sure, back when they had the majority of the domestic market, at a time when customer service was considered paramount and even people in small towns wanted the convenience of having a dealer nearby. 

Did they “bias their product mix toward pickups and SUVs?”  Sure, as more and more foreign competitors gobbled up share in the small car market, they were forced to retreat into the market segment where they could still make a profit.  And while they are criticized for building gas-guzzlers, there is little acknowledgement of the fact that this is exactly what many American consumers wanted and still want to this day, now that gas prices are falling again.  In the meantime, where is the criticism of Toyota, Nissan, Mercedes and BMW for building their own gas-guzzling SUVs?  Where is the criticism of Porsche for building the ridiculous Cayenne SUV?  Where is the criticism of Kia and Hyundai for jumping on the bandwagon? 

Did GM “proliferate” the number of brands?  No.  It had a lot of brands, but they were all acquired back in the first half of the 20th century.  Oldsmobile is gone.  GM did introduce the Saturn brand in an attempt to re-establish itself in the small car market while setting up a lower cost wage structure.  What good has it done them?  They don’t get a bit of credit for this enormous effort to build smaller, more fuel efficient cars with lower labor cost.

Regarding the issue of fuel efficiency, GM is criticized for not getting ahead of the curve by introducing more fuel efficent vehicles.  It’s not as though they haven’t tried.  But fuel efficient cars are disproportionately bought by younger buyers and, among this demographic, it’s not “hip” to buy American.  (It’s probably not “hip” to use the word “hip” either, but that’s about as “hip” as I can get!)  The Chevy Cobalt gets 37 mpg, better than the Honda Fit (and a nicer car as well) but does anyone buy them?  Nope.  They don’t show up in “tuner” magazines.  Much cooler to drive a Fit.  My son drives a Pontiac Sunfire that he bought new in 2004 for $11,000 and gets 37 mpg on the highway, but Pontiac finally killed the Sunfire when sales fell flat.  My 2001 Buick Regal, with a 240 hp supercharged V6 gets over 30 mpg on the highway.  But are any young people buying these cars?  Are you kidding me?  A “gas-gazzling American car?”  Eewww!  Not cool! 

Granted, Toyota hit a home run with its Prius hybrid, leap-frogging all others in fuel efficiency.  But in 2010, Chevy will introduce the Volt, a hybrid that can run for forty miles without burning a drop of gas.  GM didn’t embark on this enormous development project because they were forced into it.  They did it on their own.  They take heat for dropping the EV-1 prototype vehicle because market research showed that they couldn’t sell it at the price needed to recover the cost.  But where is Toyota’s electric vehicle?  Where is Nissan’s?  Where’s Mercedes’?  Is anyone criticizing them for being slow to go electric? 

Sure GM has made mistakes, its biggest being its opposition to increasing CAFE mileage standards.  But come on.  That’s not why they’re struggling.  First of all, they’re not the ones who destroyed the economy with the sub-prime mortgage mess.  Secondly,  GM, Ford and Chrysler are all struggling to hold onto market share because the domestic market has been watered down by dozens of foreign brands.  Spread that market evenly across all those brands and it’s a miracle that the domestics have done as well as they have.  Finally, they’re battling an image problem that may have been well-deserved at one time but is now as about as archaic as some of the knowledge of the auto industry on display at the senate hearings. 

Maybe now, with our economy on the brink of complete collapse, it’s time to drop our double standards and our anti-American car bias and give the Big Three a second look.  There are a lot of Americans with the attitude that “I’d never buy an American car under any circumstances.”  If those folks are looking for someone to blame for the domestic auto industry’s ills, maybe  a mirror would be a good place to start.


Time to End the War on Wages

December 9, 2008

For the past two decades or so, the federal government and the Federal Reserve have waged a relentless war on wages.  This war was a “shadow” war, a subset of the war on inflation that began with the Reagan administration in response to the soaring inflation of the ’70s.  But never mind that most of that inflation was caused by soaring oil prices.  It was assaulted on all fronts, and that included wages. 

Paul Volcker and the Federal Reserve attacked with interest rates.  But the real weapons of mass destruction were in the hands of the federal government.  The first was trade policy.  We threw open our doors and welcomed any and all foreign competition, regardless of whether or not they reciprocated, and the impact on wages was devastating.  As we were blinded by the flash of low prices, the blast wave leveled factories across the whole country.  Then came the biological weapon – immigration policy.  The labor market was flooded with immigrant workers, legal and illegal, white collar and blue-collar.  The aftermath of this war is that blue-collar wages are now lower than their peak in 1977 and median family income is now lower than it was in 1969.  Family net worth is lower than it was in 1976 and family indebtedness has soared to record levels as Americans have struggled in vain to hold onto their standard of living. 

Sunday, while being interviewed by Tom Brokaw on “Meet the Press,” President-Elect Obama remarked that all sides in the auto industry must come together and make concessions, including further wage and benefit concessions by the UAW.  With wages of $28 per hour, assembly-related workers are already paid below the national mean income and, with wages at $14 per hour, non-assembly-related UAW workers’ pay is already well below the median income.  Is cutting their wages further and cutting tens of thousands of jobs to help the Big Three survive in some form his idea of helping the middle class?  Will he claim moral victory if a few of us manage to hold onto low-paying jobs, saying that at least those jobs weren’t lost too?

High wages aren’t the problem.  Wage inflation that exceeded the overall rate of inflation is what gave Americans the highest standard of living in the world.  Since wages only represent two thirds of the cost of products, rising wages driven by a strong demand for labor actually improve purchasing power.  Cutting wages cuts prices at a slower rate and purchasing power is lost.  Inflation-fighting focus needs to be on the other factors, things like raw material shortages, product shortages, rising taxes and so on.  Want to help the middle class?  Start focusing on driving a demand for labor.  Your stimulus plan will be a nice kick-start, but we need permanent jobs – the ones our misguided trade policy gave away.  We need policies that will increase market share of the domestic automakers, not cut their capacity to match declining market share.  We need policies that will drive the domestic automakers to hire more workers, not cut their jobs and cut their pay. 

Ultimately what we need are immigration policies that stop feeding an over-supply of labor and trade policies that hold foreign nations accountable for upholding their end of the bargain.  They can either buy as much as we buy from them or we can take action to cut imports.  One way or the other, balance must be restored.  It’s their choice, but it’s our responsibility to make sure that one or the other happens.


Obama Jobs Plan: Please Tell Us There’s More

December 8, 2008

http://money.cnn.com/2008/12/06/news/economy/obama_plan/index.htm

The linked article provides more details of Obama’s plans to create 2.5 million jobs by 2011.

Obama wants to make public buildings more energy-efficient; repair roads and bridges; modernize schools; increase broadband access; and ensure health care uses the latest technology.

“We need to upgrade our federal buildings by replacing old heating systems and installing efficient light bulbs. That won’t just save you, the American taxpayer, billions of dollars each year. It will put people back to work.”

In addition, he said, “It is unacceptable that the United States ranks 15th in the world in broadband adoption. Here, in the country that invented the Internet, every child should have the chance to get online.”

“In addition to connecting our libraries and schools to the Internet, we must also ensure that our hospitals are connected to each other through the Internet.”

“These are a few parts of the economic recovery plan that I will be rolling out in the coming weeks. When Congress reconvenes in January, I look forward to working with them to pass a plan immediately.

Since he hasn’t even taken office yet, it’s too early to come down too hard on him, but I’m hoping that there will be a whole lot more to his economic plans than this.  First of all, since our labor force grows by 150,000 per month due to population growth, and since we’ve already come up short by 3.6 million jobs so far in 2008, this means that we will be 4.7  million jobs short by January of 2011 if 2.5 million jobs is all we create.  And it’s not as though we weren’t short on jobs when 2008 began.  We need 20 million jobs to restore balance to the labor supply and demand equation. 

Yesterday, during his interview with Tom Brokaw on “Meet the Press,” Obama likened the economy to a patient needing triage.  “You don’t worry about the budget deficit while you’re trying to stabilize the patient,” he said.  I agree.  Some stimulus is definitely needed to kick-start the economy.  But the way a stimulus is supposed to work is that the temporary construction jobs put money into people’s pockets which they then use to stimulate the retail sector, which then stimulates the manufacturing sector.  Once manufacturing and retailing are on a roll again, the government stimulus can be withdrawn, leaving a vibrant economy. 

But think about what will happen in this case.  Replacing light bulbs and HVAC systems will create installation work, but a lot of the money will head straight offshore for the purchase of light bulbs and heating system components.  (Light bulbs aren’t made in the U.S. any more, along with very few heating system components.)  So the effect of the stimulus will be watered down by about half.  Of the half paid out to installers, they’ll stimulate the retail sector some, but there is no manufacturing sector left to stimulate.  Virtually everything bought at retail will stimulate the economies of China, Japan, Korea and Germany. 

So once the stimulus is withdrawn, the economy will quickly succumb to recession once again.  Come on, Mr. Obama, there has to be more.  There has to be something you’re not telling us.  It’s one thing to create temporary jobs with a stimulus, but what are the permanent jobs that the temporary stimulus will leave behind when it’s gone?  Is it just that you don’t want to open up the whole trade deficit can of worms just yet? 

Going back to your “sick patient” analogy, what comes after stabilizing the patient?  Do we just leave him lying in a hospital bed, hooked up to feeding tubes but in a “stabilized” state?  That’s not good enough.  We need to make the patient healthy again.  Better yet, let’s turn him into a world-class athlete and shut down the hospital. 

The stimulus plan is a good start, but what’s needed simultaneously is (a) a system of tariffs on maufactured goods, and (b) a program of low-interest government loans to fund factory construction in the U.S.  Do that and soon jobs won’t be your problem any more.  Your problem will be trying to figure the best use for a budget surplus. 

 

“We won’t do it the old Washington way. We won’t just throw money at the problem.

The “old Washington way” is to ignore the trade deficit and sit idly by as plants are shut down and as jobs go overseas.  You’re right.  Let’s not do that any more!


Dr. Morici Sees Urgent Need to Cut Trade Deficit

December 6, 2008

http://www.usw.org/media_center/news_articles?id=0165

I’ve posted links to the writings of Dr. Peter Morici, former Chief Economist at the U.S. International Trade Commission,  a couple of times over the past few months.  This linked article is another.  In the past, he’s expressed concern about the trade deficit and has accused China of currency manipulation.  Now he’s seems to have an even greater sense of urgency:

Today, the Labor Department reported the economy lost 533,000 payroll jobs in November, after losing 320,000 jobs in October and 403,000 jobs in September. This was much worse than was expected and represents wholesale capitulation. The threat of a widespread depression is now real and present.

The economy has shed 1.9 million jobs since December, as the full weight of the banking crisis, trade deficit with China and burdens imposed by high-priced imported oil are bearing down on manufacturing, construction and the broader economy with unrelenting pressure.

Unemployment increased to 6.7 percent in November; however, factoring in discouraged workers, unemployment is closer to 8.7percent. Add workers in part time positions that cannot find full time employment and the hidden unemployment rate is nearly 13 percent.

You’ve heard me say repeatedly that the weekly jobless claims number, now over 500,000 per week – an annual rate of 26 million workers (or about 17% of the work force) – is a far better measure of unemployment in this country than the 6.7% rate suggested by the monthly unemployment report.  Here Dr. Morici corroborates that. 

But more interesting to me is that Dr. Morici is ratcheting up his concern about the trade deficit, and the lengths to which he would be willing to go to fix it:

The challenges facing President-elect Barack Obama could not be clearer. The current economic slowdown has two structural causes—bad management practices at the large money center banks and the huge foreign trade deficit.

To accomplish lasting prosperity, President-elect Obama will have to fix the banks and the trade deficit.

… Obama must address the huge cost of imported oil and trade deficit with China or any effort to resurrect the economy is doomed to create massive foreign borrowing, another round of excessive consumer borrowing, and a second banking crisis that the Treasury and Federal Reserve will not be able to reverse.

… Fixing trade with China will require a tax on dollar-yuan transactions if China continues to refuse to stop subsidizing dollar purchases of yuan to prop up its exports and shift Chinese unemployment to the U.S. manufacturing sector.

“… a tax on dollar-yuan transactions …”  This is about as close as I’ve ever heard an economist come to advocating tariffs – especially one with the esteem of Dr. Morici.  After all, what is a “tariff” but a tax, and what “dollar-yuan transactions” could he be talking about but imports from China? 

Dr. Morici goes on to discuss Obama’s plans to get wages and incomes rising again:

… stimulus spending, alone, won’t fix what’s broke. It didn’t end the Great Depression. Japan has had a succession of stimulus spending over the last two decades and that has failed to restore its economic dynamism. Similarly, President-elect Obama’s massive stimulus package, alone, won’t fix the U.S. economy. He must also reach into the management of the banks, and dramatically reduce U.S. dependence on imported oil and the trade deficit with China. The alternative is economic stagnation or worse, a depression.

Going forward, solutions that create better jobs will require cutting the trade deficit by at least half to substantially boost domestic manufacturing …

Finally, diplomacy has failed to redress the currency issue with China. If President Obama is not willing to take tough steps to redress the trade imbalance with China and reduce oil imports, together the Persian Gulf oil exporters and China’s sovereign wealth funds may be able to buy the New York stock exchange eight years from now. Americans, outside those working for the New York banks that facilitate this sellout, will find their best futures waiting on tables for Middle East and Chinese tourists.

I’ve warned repeatedly about the dangers of bankrolling the trade deficit with the sell-off of American assets.  Finally, an economist is looking far enough down the road to see the consequences of what happens when those assets are exhausted. 

Now President-elect Barack Obama must alter his position, and get behind a policy to reverse the trade imbalance with China, or preside over the wholesale destruction of many more U.S. manufacturing jobs. These losses have little to do with free trade based on comparative advantage. Instead, they deprive Americans of jobs in industries where they are truly internationally competitive.

My only criticism of Dr. Morici’s article is this:  why stop with cutting the trade deficit by half?  And why pick on China alone?  Why not do the same thing with Japan, Korea, Germany and others?  Why not tax their currency transactions?  If cutting the deficit by half will improve the economy that much, then why not go all the way? 

This is all very good news.  The cracks in the parasitic aspects of globalization are growing into gaping chasms and sentiment for taking action is gaining traction with each passing day of this economic melt-down.  Now people with real influence like Morici are getting more vocal and insistent that something has to be done.  If Obama is listening and if he heeds such advice, then much brighter days are ahead.