Debate Topic: Our Trade Deficit

I've recently stumbled onto some articles discussing the current U.S. trade deficit with China. Just to warn you, this post will be biased against the trade deficit; so keep an open mind.

So, this January 2005 article published by a U.S. commission specializing in the our trade with China talks about how this imbalance of trade causes a detrimental effect on our economy. The title description reads: "Study Documents Negative Impact of U.S. Trade Deficit with China. Job losses hit all states, high-tech industry, U.S.-China commission says." This claim was backed up by statistics that showed "that 1.5 million jobs were lost to lower-wage Chinese competition in the 14-year period between 1989 and 2003. During that time, the U.S. trade deficit with China rose twenty-fold, from $6.2 billion to $124 billion. It is expected to increase another 20 percent in 2004, to $150 billion."

Some blame our trade deficit on our corporation's lack of competitiveness and some say that this is the path the economy must take; the free market at work here. No, that is not true. The free market is being tainted here by Chinese government intervention. A February 2008 Chicago Tribune article describes the main issue: China's ascension could lead to a backlash in Congress, where lawmakers complain that China gives subsidies to aid its producers at the expense of U.S. companies and workers. "Trade protectionism will rise," said Ha Jiming, chief economist at China International Capital Corp. in Hong Kong.

Not only has China lowered the value of its currency to entice our consumers to buy their cheaper stuff, they're giving their companies money to be more competitive than ours. Is this Laissez Faire? Absolutely not. Is this unfair? You betcha!

So what does the trade deficit do? First of all, it causes our workers to lose jobs to low-wage workers elsewhere. Second, it allows more foreign companies to invest in our nation, which is actually bad because foreign firms will own our debt and control our economy (second visual aid at top). The deficit is not, however, limited to China; there are major trade deficits to Mexico, Japan, and oil-rich countries in the hostile middle east.

So what does this mean? Should we boycott companies like Walmart that buy almost exclusively from China, make huge profits by exploiting cheap labor in China, marginalize health care and social security benefits to its employees, and destroy most small businesses in areas where their businesses are set up? I say yes. Should we buy all-American? Yes, when we can; I realize that due to finances, we have to juggle our money carefully and thus, buying cheap products from China may sometimes be necessary. One last thing: I need to clarify that I don't want to stop trade with China completely, I just advocate a favorable trade balance.

So, this is where you come in. Do you have any thoughts on this issue? Do you disagree with my argument? Do you want JSA to host a debate on this issue? We encourage you to speak about it at the next meeting, or write a comment.

Sincerely,
Nguyenstern