Obama Has Plan to Boost Exports. I Smell a Rat!

http://www.cnbc.com/id/33898862

The above-linked CNBC article reports that Obama has a plan for boosting exports to Asian nations, a plan he’ll unveil in his upcoming trip to the region.  

President Barack Obama said on Thursday he planned to discuss a strategy with Asia Pacific leaders calling on their countries to import more U.S. goods and the world to rely less on exporting to the United States.

“In the coming days, I’ll also be meeting with leaders abroad to discuss a strategy for growth that is both balanced and broadly shared,” Obama said before leaving on an Asia trip that includes a meeting of APEC (Asia Pacific Economic Cooperation) leaders in Singapore.

“It’s a strategy in which Asian and Pacific markets are open to our exports, and one in which prosperity around the world is no longer as dependent on American consumption and borrowing, but rather more on American innovation and products,” Obama said.

Since boosting exports is something over which the U.S. has absolutely no control, I smell a rat.  Exports are a function of foreign demand for U.S. products and we have no control over that.  We’ve been trying for decades – cutting our manufacturing costs, complaining about exchange rates, filing complaints with the WTO (World Trade Organization), boosting “innovation” – all to no avail.  If our trading partners are unwilling or, more precisely, unable to import more American products, they won’t.  So what’s the plan?  Does President Obama plan to send container ships-full of American products to Asia and then dump them in the ocean?  Hey, I have a plan to boost book sales, too.  I can advertise and cut the price of the book all I want but, unless I put a gun to your head, you won’t buy the book unless you want to. 

Well, perhaps there is another way.  I could give you $20 to buy the book, which retails for $16.95.  Who wouldn’t jump at that deal?  Of course, I’d have to just print money to keep that offer going for very long, but at least I could delude myself into believing that book sales are going gangbusters and, as long as you’re willing to overlook the fact that the money is couterfeit, then you’ll be happy too.  And my printer will be happy as a clam. 

Could it be that Obama’s plan is something similar?  We’ve seen that he and Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke have no qualms about cranking up the printing press to boost the economy.  The problem has been that Americans then use that money to fund the purchase of imports, boosting foreign economies and not our own.  So wouldn’t a more effective use of that money be to just give it to China, Japan and Korea on the condition that they use it to buy American products? 

Yeah, yeah, I know:  it’s a stupid idea that’s doomed to failure, once mountains of American products pile up on the wharves at their ports, and once we realize that those funds are being diverted to expand China’s military.  But it would boost American manufacturing in the short term, for maybe a few years, which is all President Obama needs to win a second term and to claim a legacy of having revitalized the manufacturing sector of America’s economy.  Publicly, both Obama and the Asian nations will claim that this money is a “loan” from the U.S., but privately they will agree that it’s nothing of the sort; just printed money that’s never to be repaid. 

If this isn’t the president’s plan, then something equally twisted is likely to emerge.  If our leadership isn’t smart enough to fix our broken trade policy in a way that’s within our control, by returning to the sensible application of tariffs that once built this nation into the world’s preeminent industrial powerhouse, then its only alternative is to strike preposterous deals that gloss over our trade imbalance and give the appearance having done something meaningful.

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7 Responses to Obama Has Plan to Boost Exports. I Smell a Rat!

  1. Angie says:

    The definition of ‘Boosting Exports’ is promoting Our, American, products over seas. In other words Obama is telling the Asian countries no more unfair trade. For now on they have to except our products or we will Lower the import of their products.
    Obama and Democrats’ way: Exporting is products we make and sell to other countries. “Great for the American Economy and American Jobs.”
    Bush and Cheney and Republican way: Importing, taking in more foreign products than what we sell overseas. “Very BAD for the economy”.
    I guess you say you smell a rat because you either do not know the definition of Exporting.
    Or you are a Republican who wants to contiue buying the products from countries overseas instead of making the products ourselves. I guess you like it when Americans are out of work.

    • Pete Murphy says:

      Well, Angie, it seems you’re wrong on all counts. First of all, I know very well what exports are and, secondly, I was a strong supporter of Obama because of the promises he made regarding our trade deficit. And regarding your last sentence, you obviously haven’t done any research to see what this blog is all about. If you had, you’d have discovered that the whole point of my book was to warn Americans about the real root cause of unemployment in this country.

      I’ve been around long enough to know effective trade policy when I see it, and a promise to boost exports is the same thing we’ve been hearing from every administration for the last three decades. It never happens because it’s not within our control to boost exports. You fault Republicans for doing nothing to slow imports, but do you see Obama doing anything about it? He has flat-out refused to do anything about it. Meanwhile, every one of our trade partners understands very well the need to keep a lid on imports. They adopt smart trade policies while America’s leadership and American workers are played for fools. This “plan” to boost exports is the same kind of token gesture designed to placate Americans that we’ve been subjected to for decades. No, I haven’t seen the “plan” yet but know enough about trade to know that no such plan can be effective unless it resorts to the kind of gimmickry I’ve speculated on in this article.

      Angie, you’re very welcome to comment here but I strongly suggest that you not be so anxious to find fault. Also, even if you’re an Obama supporter, you need to not swallow everything he says hook, line and sinker. Our trade deficit has only grown during his presidency and he hasn’t done a thing about it. He’s turned a blind eye to Japanese dumping and did nothing in response to big Mexican tariffs. I supported Obama but have been very disappointed with his inaction.

  2. Mark Hall says:

    Maybe part of the plan involves our “Clunker” car program.

    700,000 vehicles @ $4,500 (Rebate Cost)= $3.15 billion. Fair Market Value?

    700,000 vehicles @ 1.5 tons = 1.05 million tons.

    1.05 million tons @ $200 = $210 million. Salvage Value to China?

    Recognized value of U.S. exports = $3.15 billion.

    Results:

    U.S. exports to China increase by $3.15 billion.

    China pays $210 million.

    U.S. tax payers pay $2.94 billion.

    Based on past performance, this is probably the type of plan that our officials are going to unveil to increase our exports to China and increase China’s domestic consumption.

    When you consider that in some cases we have probably spent $500,000 in stimulus funds to create a temporary $50,000 a year job, this might be a better deal.

    • Pete Murphy says:

      Funny, Mark, but I think most people would be surprised at how much of our “exports” are actually trash or, as in the case here in Michigan, the importation of trash from Canada (which is booked as an export of “services,” the service of disposing of Canadian trash). Over 100 truck loads of trash arrive in Michigan every single day. Southeast Michigan is slowly being transformed into a massive trash heap.

  3. […] imports of American products.  And now we see that his big plan to boost American exports (see https://petemurphy.wordpress.com/2009/11/13/obama-has-plan-to-boost-exports-i-smell-a-rat/) was nothing more than a vague hope.  The whole trip was a complete waste of time – time […]

  4. ClydeB says:

    I’ve been pleasantly surprised at how well you’ve managed to keep both the Obama and the Bush-Cheney haters to a minimum on your blog. At least until now.

    Truth be known, none have done anything positively memorable and all have failed to recognize the problem. A pox on both parties going back to GATT fo that matter.

    The solution to the trade policy failures may require a total breakdown and monetary collapse before either is willing to realize the true cause and obvious solution.

    • Pete Murphy says:

      Thanks, Clyde. I truly have no vested interest in either party. I’ll hitch my wagon to anyone who promises to do something about the trade deficit and about our ridiculous policy of stoking the economy with destructive population growth.

      Regarding your last sentence, that’s what frustrates me most. We already had the total breakdown (or as close to it as we may ever get) while, simultaneously, we had a candidate who promised to do something to fix our trade imbalance. But, while he does seem to understand that the imbalance lies at the root of our problems, he’s completely unwilling to take any meaningful action to fix it. It’s totally irresponsible. I’m afraid that we’re headed for something worse than we’ve witnessed in the past year, but we’ll probably muddle along for a while with the delusion that the stimulus spending has actually fixed the problem.

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