The Enormous, Humongous Trade Deficit Got Bigger in 2016, Action Needed
The United States ran the most enormous, humongous trade deficit last year since 2012. The gap between our exports and imports widened by 0.4 percent to $502.3 billion in 2016, the Census Bureau reported today. The government also found that the trade deficit amounted to $44.3 billion in December, down $1.5 billion from a revised $45.7 billion in November.
The goods deficit with China alone hit $30.2 billion in December, up $1.8 billion from the previous month.
The shocking trade deficit our country ran last year includes the services surplus. What happens if we separate services from goods? Exports of services decreased $1.3 billion to $749.6 billion in 2016. Imports of services increased $13.1 billion to $501.8 billion in 2016. Services ran a surplus of $247.8 billion. Exports of goods decreased $50.5 billion to $1,459.8 billion in 2016. Imports of goods decreased $63.0 billion to $2,209.9 billion in 2016. The resulting goods trade deficit was $749.4 billion. This is an enormous, humongous number. (Reports of this number will vary, due to “seasonal adjustments” and rounding. It is reported here as $734.3 billion, still an enormous, humongous number.)
What this means is in 2016 we moved $749.4 billion (or $734.3B) worth of jobs making, mining and growing things out of the country. And that included a third-quarter surge in soybean exports.
The trade deficit is really about moving production out of the United States to cut costs for American corporations. Close a factory and lay off the workers here, buy the goods from a factory there that pays squat and doesn’t protect the environment, pocket the difference. In particular, we’re talking about moving production to China since 2001, as Leo Gerard and I have recently explained.
It Doesn’t Have to Be This Way
A trade deficit can be a good thing if it’s temporary and if the deficit is used for things that help our economy, like productive investment at home. For example, if a company is moving production to China but reinvesting the savings to improve domestic facilities and educate and employ the people whose jobs were exported it can benefit everyone in the longer term. But that’s not how our companies are using outsourcing. They’re using it to put cash into the pockets of the “investor class” and put wage pressure on the rest of us. They’re exporting our manufacturing ecosystem without reinvesting in improved domestic industrial capacity. This is literally selling the farm. And this has been going on for a very long time.
Individual companies have an incentive to do these things. But if all the companies do these things the country as a whole is drained of its industrial capacity, wealth, jobs, wages and the ability to make a living. This is why government has to step in and provide incentives and regulations that make sure the playing field is working for all of us instead of just a few of us. We need tax policies that reward domestic investment and regulations that prevent investors from “selling the farm” for their own short term profit. The nation’s “industrial capacity” farm is what feeds us, so it’s not really their farm to sell, it’s ours.
***
Reposted from Our Future.
