Don't Buy the Hype, a Trade War is Exactly What We Need

In the short run, trade wars can cause some pain and some market shortages; but in the long run, one can argue that they strengthen those nations that are capable of self sustenance against those that are not.  While many correctly argue that the protectionism prolonged the Great Depression, protectionism also developed an unprecedented concept, the middle class, which allowed the United States to grow and thrive for over sixty years.  Thus, short term pain led to long term dominance including a dominating presence in the Second World War.

Simple math, GDP= G+C+I+(e-i).  The letters e and i represent imports and exports, and the difference of the two is defined as net exports.  If exports exceed imports an economy gets a boost from international trade, if imports exceed exports the number is negative thus creating a drag on the country's GDP.  Since positive GDP is desirable, one would surmise that countries prefer to have positive net trade.  While sarcasm is not my style, I find it literally implausible that any person who resides in a country with a net import could argue that trade on such terms is a positive for them (if they are capable of self sustenance, i.e. not lacking sufficient resources to maintain life). It's a drag the country's GDP and a threat to its national security.  After all, some of the worst threats to the economy of the United States has been the result of dependence on the import of foreign oil.

Now, I understand that a small number of elite finance, corporate multinationals and ultra wealthy would like to proliferate a belief that the United States should not protect itself in any manner when it comes to international trade. These arguments are based in self interest and selfishness.  They are not healthy arguments, and clearly not sound judgment for a country that aspires to be the world's super power.  That said, these voices are strong because they own the media sources, banks, and a number of our elected officials.  Regardless of their amplification, they are wrong.

Succinctly and logically put, saving per our purchases from cheap foreign labor is not worth having a country where middle class workers have no means to make a life for themselves.  

Now many argue unions are to blame for the lack of competitiveness in the American worker, and while there is much merit to this argument, it is collateral to the point.  I'm talking about keeping American dollars in America.  Currently, Asian and Middle Eastern Countries use our dollars to manipulate the values of their currencies so that they can continue to be net exporters to the United States.  With little to no importance on the global scale as consumers, the citizens of these countries suffer with their undervalued currency while their governments use the captured dollars for investment in stocks, bonds and commodities.  That's right, the countries themselves use our currency to corner markets, drive up commodity prices and control corporations.  

Americans thus suffer a self-inflicted punishment.  We need two incomes to raise a family and we lose the ability for upward mobility as globalization destroys our need for our own human capital.  It starts with manufacturing and soon it is service work, finance and engineering.  

The proper question is why suffer?  The elitist with no regard for our Nation say it "makes us stronger," but that's nonsense.  The reality is that we live in a country loaded with natural resources, the benefits of capital, and the massive infrastructure that reflects our wonderful experiment of capitalism.  We have it all.  

Unlike the Chinese, Japanese, Russians, Germans, Mexicans and Indians we don't need them to purchase our goods to survive.  We are the consumer and they are without recourse should we insist on fair terms of trade.  Any great leader knows that he or she has at their disposal the power and ability to dictate whatever terms they have the power to uphold and impose.  One for one (export for import), as Warren Buffet would declare, is within our reach by a simple declaration by the US that such a standard is the now necessary.  The United States has the strongest military and the power to enforce its will with little or no recourse.  Why allow the weak to become strong by eating our innards?  Why destroy our way of life while those of ambition and tactical advantage attempt to unseat us with our own weapons. 

 We need to wake up, and stop the leak.  We must remember a multinational corporation is not country, the United States is our Nation.  Further we must act now, while we still can enforce our will.  This disturbing trend could unseat our ability to dictate terms.  With every mutter of changing the dollar as the international currency, every balk at trade reform by net exporters, and every month of negative net exports we move closer to becoming irrelevant.

For a more in depth discussion on this topic please see: http://commoncentsdg.blogspot.com/2009/01/national-security-and-balancing-current.html

Not a Flat Tax, a Head Tax

Many agree that we could sufficiently reduce government spending if we could simplify our tax code.  Think of all the waste in having the gray suits at the IRS calculate and audit people's taxes.  In a collateral respect, think of the amount of money spent by individuals to comply with the complications of tax code in hiring professionals to maximize their yearly reporting.  It is literally waste generated by waste.

Many have suggested a flat tax.  A decided percentage, across the board, for every citizen regardless of socioeconomic status.  That said, the nature of the flat tax still discriminates.  That's right, it discriminates between those with income and those without.  If one has no income, they are tax exempt.

Why not then pass a system where all adult citizens are treated exactly the same?  A head tax.  In exchange, for services the citizens shall pay a pro-rata share of the yearly budget each year.  The bill will be shared by all so that we are incentivized to produce.  We are incentivized to produced because not just every incremental dollar, but every actual dollar, earned over and above the taxed amount shall be the citizen's to keep.  The Country would not tax minors since we aspire for a growing population, but all other citizens would share in the burden of government services provided.  The head tax would make our country the first to align the citizens with the dangerous current account and budget deficits by having them realized in the daily lives of its citizens.  

To ensure compliance, failing to meet one's pro-rata portion of the budget would lead to the same severe punishments as currently reserved for failing to pay income tax with one additional caveat, no access to courts, voting, or public welfare until repaid.  While this sounds harsh, one must remember the head tax would be very minimal compared to current tax levels as citizen's would not procure government services they didn't find "worth it."  Charitable minded citizens could choose or collectively raise money for the less privileged to meet their taxes each year so that those unable to pay are allowed continued access to government services.  The important part is that everything remains paid for, wars included.

Like splitting the check at the end of dinner the incentive to waste countless hours and money hiding income would be forgone for more productive uses of brain power.  We would allow employers to pay workers head tax; as well as, friends pay one another's taxes without penalty or additional taxes generated.  The point of a head tax is payment, not punishment.  If we lose jobs due to poor trade policies, natural disaster, poor family values or senseless profiteering abroad the consequences would come to roost in the form of shortfalls when citizens could not meet their obligations.  If we ask for more government services the consequences would quickly become apparent when the "bill" arrived.  A head tax would force the United States to put itself in a harmonious balance of work, capital, income, collectivism and Nationalism.  That'd be alright by me.