What Happened to Obama’s Goal to Double Exports?

October 11, 2012


In January, 2010, President Obama set a goal of doubling U.S. exports in the next 10 years.  He referred to that goal during the debate with Romney, as though it was a goal that was being met.  (Nobody called him on it.)  The objective was to emulate Germany, an economy that thrives on manufacturing for export, and thus whittle away our huge trade deficit.  I said then that any plan that focuses on exports was doomed to failure from the outset, since the U.S. has absolutely no control over exports, which are driven by foreign demand.  (The only thing we can effectively control, if we ever tried, is imports.)

This morning the Bureau of Economic Analysis released its report of international trade for the month of August.  (See above link.)  Both overall exports and manufactured exports declined for the 2nd month in a row.  Overall exports are at their lowest level since March, and manufactured exports are at their lowest level since September of 2011.  Overall exports lagged the president’s goal for the 13th consecutive month by over $24 billion – a new record.  Manufactured exports lagged the president’s goal for the 11th consecutive month by more than $15 billion – a new record.

This economic strategy – the bedrock of Obama’s plan to boost the manufacturing sector and the overall economy – is an abysmal failure.  It’s a failure because it never had any chance of succeeding.  Aside from begging our trade partners to boost their imports of American goods – a tactic that has been a proven failure for decades – no other action was taken by the administration to actually work toward the goal because there’s nothing it can do. 

Will there ever come an American president with the backbone to say “enough is enough” and turn his focus on imports?  Will there ever come a time when we bid farewell to the World Trade Organization and its avowed goal of running a rigged trading scheme that favors undeveloped and developing nations?  Not in the next four years.  Obama has proven that he’ll do nothing about it.  Romney has vowed to make matters worse by pursuing even more destructive free trade deals. 

Here are the charts of the data:  Obamas Goal to Double Exports     Balance of Trade     Manf’d exports vs. goal     Manf’d Goods Balance of Trade

When Obama took office, I predicted that, if he didn’t address the trade deficit, he’d be a one-term president.  In a month, that prediction will come true.  And my prediction regarding President Romney will be the same.

A Clear Choice in November

August 18, 2012

You’ve probably noticed that, as the presidential campaign has picked up steam and as more has become known about Romney and, much more recently, his running mate, Paul Ryan, I’ve had very little to say.  It’s not that I haven’t given it a lot of thought but, the more I think about it, the more bored and disenchanted I’ve become.

Upon Romney’s selection of Paul Ryan as his running mate, political analysts were quick to proclaim that the election now offers a clear choice.  Now that I’ve had time to think about it, I agree.  We do have a clear choice.  We can go to the polls in November to vote for Romney or Obama, or we can choose to stay home and at least avoid wasting an hour of our lives that we’ll never get back.  Look at it this way:  even if you’re among the youngest of voters – 18 years old – your life expectancy says that you have about 525,000 hours left to live.  If it’s a close election with less than 1% of the votes separating the winner and the loser, then it would take a swing in votes of approximately 750,000 to change the election results.  In other words, the percentage of your life that you’re wasting is greater than the odds that your vote will make a difference. 

And, make no mistake, casting your vote for either Obama or Romney is a waste of time.  All domestic economic issues are, ultimately, either rooted in or heavily impacted by only two key issues – trade policy and immigration.  On these two issues, there isn’t a lick of difference between Obama and Romney.  On the subject of trade, both are adamant supporters of free trade so, with either, we’re assured of another four years of goods trade deficits in the range of$800 billion per year.  And, since deficit spending is the only way to make up for that drain on the economy, that assures that budget deficits will continue to run close to $1 trillion per year, regardless of what promises either candidate makes to reduce the deficit.  The only difference will be how the deficit is spent.  With Obama, the poor will get a little more relief.  With Romney, the wealthy will be a little better off and the poor will struggle a bit more.  For everyone between those extremes, there will be no difference whatsoever. 

There’s even less difference between Obama and Romney on the subject of immigration.  Obama and the Democrats openly support high rates of immigration, including turning a blind eye to illegal immigration.  Romney and the Republicans make a lot of bluster about illegal immigration but, once in office, all we’ll get is some token enforcement while they quietly go about the business of boosting H-1B visas and ramping up legal immigration to placate wealthy donors who want to keep downward pressure on wages and benefits.  The end result will be the same:  throwing more fuel on the fires of unemployment, higher energy prices as more consumers put more pressure on limited supplies, and more greenhouse gas emitters at a time when we’re supposed to be drastically cutting our emissions.  I could go on. 

Republican philosophy favors and rewards hard work, entrepreneurship and risk-taking.  I like that philosophy.  But I don’t like depriving people through bone-headed trade policy of their opportunity for hard work and then throwing them under the bus, denying them assistance they’re now forced to rely upon. 

Democratic philosophy favors helping such people, but at the risk of creating a moral hazard for the rest of us by disincentivizing hard work.  Why should I work hard when all these other people appear to be sitting back and living off of government largesse?  I’d like the Democratic philosophy more if, at the same time that they’re helping those displaced from jobs by our trade policy, they’d actually get off their bleeding-heart asses and do something to fix it. 

Neither party is interested in doing a damn thing to get this country back on track.  That would entail some very hard work and some unpleasant encounters around the punch bowl at G20 meetings.  Instead, they’re content to polarize, pander to their bases, and try to sucker independents with promises that they never intend to keep. 

OK, I’m being overly cynical about voting.  It’s not a complete waste of time.  There will be local issues on the ballot where a few votes either way can have a meaningful impact on your life.  But don’t fool youself about your vote for president.  Your one vote out of 150 million votes, cast for either of two candidates from the same Republicrat party, is about as meaningless as it gets.  The odds of your vote making any difference in your life is about the same as your odds of winning the lottery which would, in fact, make a huge difference in your life.  So, if you’re a person who’s all fired up about this presidential election, you might stop and reconsider.  Maybe your time would be better spent with a trip to your local 7/11 to buy a lottery ticket instead of wasting it on a trip to the polls.

Again, I’m being overly cynical.  I do plan to vote in November.  But for whom?  Not Obama.  Obama’s done some good things as president.  He bailed out the auto industry and he got Osama bin Laden.  But he’s failed miserably on trade policy, breaking his promises to rewrite NAFTA and to get tough with China.  He and his surrogates have been door mats in trade negotiations.  His immigration policies have been even worse, accelerating legal immigration and encouraging more illegal immigration.

And not Romney.  He has plans for much bigger free trade deals.  And while his promises to get tough on illegal immigration are appealing, I strongly suspect that any such moves will be token in nature and will tend to make the problem go away by making it easier for immigrants to enter legally.  Romney is proud of his business record and will judge his success in rehabilitating the economy by how well business is doing.  If corporate profits rise, it doesn’t matter if it’s done through more outsourcing and more cuts to wages and benefits.  If tax cuts go straight to their bottom lines or are used to finance more overseas investment, no matter.  And the whole supply-side, trickle down economics he embraces?  Been there and done that, and look where we are.  “Trickle down” worked when the trickle actually went down, as it did under Reagan, before most of our manufacturing jobs left.  Now, the money spent by the wealthy on luxuries trickles out to foreign manufacturers and does little to help anyone here, other than themselves.  And stories about Romney – his leading a gang in high school who attacked another student and cut off his hair (and then denying remembering the incident), and loading the family dog into a crate for a ride on the roof of the car – leaves me wondering whether he suffers from a serious lack of empathy, something that should be of concern for anyone lower on the economic ladder than Romey. 

That leaves me no choice but to use my vote as a protest – using it in a futile effort to vote for someone else.   And who better than myself?  Look at my platform.  Can you find another candidate with one better?  So I plan to write in my own name.  My wife has said that she’ll do the same.  Consider it yourself.  Will it make a difference?  Not likely.  But who knows?  It’s kind of like the lyrics from “Alice’s Restaurant”, a 60’s song by Arlo Guthrie about one boy’s experience at the draft board:

… there’s only one thing you can do and that’s walk into the shrink, wherever you are, just walk in say “Shrink, you can get anything you want at Alice’s restaurant.”

And walk out. 

You know, if one person – just one person – does it, they may think he’s really sick and they won’t take him. 

And if two people – two people – do it, in harmony, they may think they’re both faggots and they won’t take either of them.

And three people do it, three – can you imagine?   Three people walking in singin’ a bar of Alice’s Restaurant and walking out?  They may think it’s an organization. 

And can you, can you imagine fifty people a day?  I said fifty people a day walking in singin’ a bar of Alice’s Restaurant and walking out?  Friends, they may thinks it’s a movement.

(The term “faggot” was used by Guthrie to mock the prevailing attitude toward gays that you’d have found at the draft board in those days.)

Well, friends, maybe it’s time to start a movement.  You have a clear choice in November – join the movement or waste your vote on a Republicrat.  If it’s just my ballot and my wife’s that has my name penciled in, it won’t make a bit of difference.  Fifty ballots won’t either.  But 500?  Or 5,000?  That might catch somebody’s attention and raise some eyebrows.  Maybe it’ll start a movement.

Workers at Bain-Owned Plant Beg Romney to Save Their Jobs

July 18, 2012


Ouch.  Romney really didn’t need this at a time when his background at Bain Capital – something he hoped would be an asset in his presidential run – is steadily becoming a liability.  It seems that workers at a Bain-owned plant that manufactures sensors for the automotive industry in Illinois have signed a petition asking Romney to use his influence at Bain to stop the plant from being moved to China.  (Bain owns a controlling share of Sensata, the company that owns the plant.)

In all fairness to Romney, he had no role in these moves, which all took place after he left Bain.  The problem is that this is exactly how capitalism, lacking any trade boundaries, works.  Romney can’t deny that any more than he can deny that that’s how it worked while he was at Bain.  As much as Romney would like to deny it, the fact is that venture capitalists have been net job destroyers in America for a long time. 

That’s how trade between two nations grossly disparate in population density work.  When American companies, disgruntled with their mature market of 300 million consumers at home, were suddenly presented with a virgin, untapped market of 1.2 billion consumers in China, they rushed in to build plants there to supply that market.  But, once there, while that market was still in its infancy, they needed to immediately start selling those products.  What better market to dump them on than the one with the hungriest consumers – America?  Now their American plants – already operating on thin margins and dependent on maintaining their high sales volume, were faced with a massive increase in competition.  They were almost instantly forced to close.  In a free trade world lacking boundaries to prevent the inescapable trade imbalances driven by population density disparities, that’s how capitalism works.   It’s painfully obvious to most Americans.  As much as Romney may want to deny it, such denials are coming across as disingenuous at best. 

Some of the specifics here are interesting. 

Sensata was created in 2006 when Bain bought Texas Instruments Inc.’s sensors and controls business. The company now employs 11,400 people worldwide. Almost all of its products are manufactured outside the United States, in countries such as Mexico, China, Bulgaria and Malaysia.

Mexico, China, Bulgaria and Malaysia.  What do you think is the per capita consumption of Texas Instruments products in those countries compared to the U.S.?  A very small fraction.  And what is the population density of those countries compared to the U.S.?  2X, 4X, 2X and 3X the density in the U.S. respectively.  Combined, their population density is close to 4X since the other three are dwarfed in size by China.  They come to the trade table with vast, idle labor forces, looking for jobs, but with virtually no market to offer in return.  Is it any wonder that manufacturing jobs are disappearing? 

If there’s any benefit to be derived from this election campaign, it will be the erosion of economic myths – the shining of light into the dark room where we’ve all been treated like mushrooms – kept in the dark and fed a bunch of B.S.


Trade Deficit Rises to Worst Level Since June

January 13, 2012

The Bureau of Economic Analysis announced this morning that the November trade deficit rose to -$47.8 billion, its worst level since June, as imports rose by nearly $3 billion and exports fell by $1.5 billion.  (Click here for the report.)

The trade deficit with Germany rose to just below the record level set in October of 2005.  The 2o11 trade deficit with China is only $1 billion below the record set in 2010, and that’s with a full month to go in 2011.  The only question is whether the trade deficit with China will top $300 billion. 

The U.S. trade deficit continued its slow but steady worsening since President Obama, in January of 2005, set a goal of doubling exports in five years.   Here’s the chart:  Balance of Trade

Exports failed to meet the president’s goal for the fourth straight month although, until November, exports tracked very closely to the president’s goal.  But, in November, exports lagged the president’s goal by over $7 billion, by far the worst lag since the goal was set.  Here’s the chart:  Obamas Goal to Double Exports

But the real goal, of course, is to double exports of manufactured products, since that’s where the real opportunities for job creation lie.  Here the news is even worse.  Exports of manufactured products lagged the president’s goal for the seventh consecutive month, by more than $10 billion.  Here’s the chart:  Manf’d Goods Balance.  As you can see, exports of manufactured products have fallen completely off the track for attaining the president’s goal. 

No surprise.  The president has done absolutely nothing to stem the tide of imports and bring American manufacturing jobs home.  Contrary to his promise to rewrite NAFTA to correct the trade problems with Mexico, he’s done absolutely nothing except turn tail and run as soon as Mexico was angered by the suggestion.  Contrary to his promise to get tough with China, he’s resisted efforts by Congress to label that nation a currency manipulator, which would open the door to punitive tariffs.  He’s done nothing but talk and put on shows like his forum this week for insourcing American jobs. 

Romney has promised to slap China with the “currency manipulator” label on day one of his administration.  Do I believe it would be anything more than a symbolic gesture, or that he would then actually follow through with tariffs?  No.  But Obama proved himself a liar when he made a similar pledge, and I’m fed up with Obama’s timidity on the trade issue.  I’m thinking the time is here to give Romney a chance.