China becomes world’s largest trading nation  

January 11, 2014

Led by popstars like the charismatic Paul Krugman and powerful Ben Bernanke, most people still think ill of trying to take strong measures to save what little is left of our industries. The common claim is that this is protectionism, and protectionism hurts everyone in the end.

Folks, it is time to wake up and smell the General Tso’s Chicken: China is doing exactly this and they are moving forward while the rest of the “free trade” world suffers. ┬áJust take a look at this week’s blockbuster headline.

China surpasses US as world’s largest trading nation

Beijing describes 2013 figures as ‘a landmark milestone’ as annual trade in goods passes the $4tn mark for the first time…

We see signs of decay and decline all around us, from Detroit the former home of the automotive industries where entire city blocks are vacant to Camden, New Jersey where police are encouraging neighborhoods to stock up on guns to protect themselves from criminals. And it is getting worse.

Meanwhile, across the ocean in China, where their politicians have imposed very high import restrictions on goods from the U.S., entire metropolises are blooming in the span of decades, complete with skyscrapers. They gladly accept our natural resources while imposing such high taxes and tariffs on our goods that the Chinese consumer can’t purchase it.

Year after year of grossly imbalanced trade between the U.S. and oversea countries like China show the clearest example of the flight of wealth from this country. And the trade deficit is getting worse and worse.

2 Responses to China becomes world’s largest trading nation

  1. wanman4 on April 20, 2015 at 9:09 pm

    I am checking out your website, kind of confused, Keynesian Economics??..Full protectionism, how does that make American based companies products better..Just think back on American Cars before Japan got involved in importing better made cars to the USA…Why can we not negotiate the agreements and level the playing field and if they do not play ball then tariffs etc..Also, what do we do when they stop financing our debt??…Won’t interest rates rise??..Please educate me as I like you concept, but I don’t know if absolutes work in most arrangements, even marriage?..WT

    • Jay Paul on April 21, 2015 at 12:52 pm

      These are some great questions, and thank you for asking.

      The primary question that I see is this: Can full protectionism work? The answer is a simple: “Yes, history shows it can work.”

      Your other questions are good too, and require a little more explanation. Thinking back to American cars compared to Japanese cars, consider how much a car at that time cost. Now consider how many American workers you could have hired for one day for the price of that car. Now, consider how many Japanese you could have hired for one week for that same price. Is it any wonder why their cars were superior? If you’re paying your workers a fraction of what the competition is, you can afford to produce a much higher quality product.

      Let’s look at some numbers to really drive this point home. If a shoe costs $100, I could hire 10 workers in the US to work for 1 hour making that shoe. Or Nike could hire 40 workers in Indonesia to work for 1 day making that shoe, and still have $50 to spend on materials and advertising.

      Yes, in the short run we do get better, cheaper products by using cheap labor overseas. But this is the equivalent of eating the seed corn. Our country is selling our future for baubles now. These improvements would come in the long run if we continued to make products here. Compare American cars in 1920s to 1950s to 1980s to the 2010s. They improve over time.

      The only way cars won’t improve is if Americans can no longer afford to pay for them. If we don’t have jobs, we won’t have competitive wages. If we don’t have competitive wages, we can’t afford nice cars. If we can’t afford nice cars, the quality will slow down. If we want better quality products over the long run, we must sustain the income of the American people. We can only do this by bringing our jobs back.

      We find ourselves, today, in a rocky pit. There is no easy path out. No matter which way we turn, we are faced with a challenge. If we stay as we are, we are headed toward certain economic disaster–maybe this year or maybe in 50 years. It is inevitable. It will be very difficult for everyone and very hard to recover from.

      The other choice is to protect our workers. It is better to act now than wait, but, let’s be frank, it will be difficult as well. We have become accustomed to eating our seed corn. It is easy and filling, and nobody wants to worry about where tomorrow’s seed corn is coming from. Turning our situation around will require sacrifice and grit to bring our capital and industries back to American soil. We absolutely must invest in our future, our children and grandchildren, instead of enjoying tomorrow’s product today at the expense of future generations.

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