Thursday, September 16, 2010
How to double exports in five years. Step one: Destroy the dollar. Step two: Enact policies that keep wages low. Step three: Repeat!
We're getting a real time look at what policies are necessary to achieve Barak Obama's goal of doubling U.S. exports in 5 years.
Step 1. Destroy the dollar.
Making the dollar weak brings us instant export competitiveness. The only problem is, it reduces our real terms of trade, which is the same as saying it lowers Americans' standard of living relative to the rest of the world.
The Administration is attacking China now and pushing it to raise the value its currency so that ours can go in the toilet. That is their brilliant idea and it's also an idea that is adored by so many mainstream economists. Go figure.
Step 2. Enact policies that keep wages and incomes low.
By keeping incomes low we also achieve comparative advantage. Other nations find it more cost effective to buy our products if we don't pay our workers very much.
How do we keep incomes low? Simple. Give huge tax breaks to corporations that are not likely to be passed along to workers. Don't cut taxes for people; just for businesses. Keep unemployment very high so that people become so desperate they'll take any low paying job they can find. Reduce spending on education so that more people will have to settle for low-paying jobs. Cut social supports so that people become destitute enough to work for practically nothing. Target unions or any organizations that are countervailing forces to businesses.
Step 3. Repeat!
Those three steps toward greater exports for America are now happening. And for us Americans it means we will send more of the fruits of our labor to foreigners and we will have a lower standard of living, but hey, we will have created a few jobs. Yippeee!!!