Global Crisis Blog

America’s Economic Policy:  Load of Dung

By Shlomo Maital

  Author Clyde Prestowitz, who has just published The Betrayal of American Prosperity, recounted that he originally wanted to title his book Load of Dung, referring to the fact that just before Rome collapsed, loads of carts came in to Rome carrying a wide variety of goods, and left Rome carrying…dung.  Check the containers entering and leaving America, and the picture is not much different. 

    An article in the latest edition of Fortune magazine reveals that for the first eight months of 2010, fully 700,000 more containers entered the Ports of New York and New Jersey than left.  I wonder where they put them all ???   The same article reports that 45 per cent of the containers exported from America are empty – sent back to China, to be refilled and shipped to the U.S.

    In August, latest figures available, America’s trade deficit grew to $46 b., an increase.  For the past 12 months ending in August, The Economist reports that the trade deficit remains a staggeringly high $621 b.  Imports totaled $200 b., up $4 b. from July.  More than half the total trade deficit came from America’s trade with China, or a total of $28 b.

    Intel CEOPaul Otellini recently noted that “Intel is the ‘last one standing’”, because “no one else has built a new [semiconductor] factory  [in America] in five or 10 years.  Everyone is building it either offshore or through joint ventures somewhere else.  If [semiconductors] is the most important technology of the 21st C., and the first derivative is negative relative to building new factories here, it ain’t good.” 

     The only way the containers will leave America full, and not full of dung (or paper for recycling, as if often the case now), is if America makes a strategic decision to renew and reinvent its manufacturing, and to take the necessary steps to make this happen.  Exports from the US must rise, if the world is to achieve ‘rebalancing’,  and the only way to export, as far as I know, is when you actually make things and sell them abroad.  If you do not make things, you cannot export, no matter what the exchange rate for yuan-dollar is.