Over the past decade America has experienced a near total collapse in manufacturing. Our leadership has failed to properly address this major issue strangling our economy’s growth.
An economy cannot have healthy growth while losing more money than it’s taking in. If we would correct our trade deficit with China, which is hemorrhaging money out of America, we would see billions flow into domestic manufacturing and a healthy increase of money retained by our economy.
In global economics, money flows towards manufacturing. Our leadership can accomplish this with a single piece of legislation that adjusts the currency rate with the Chinese Yuan to our Dollar to its natural exchange. This raises the question, why haven’t they?
According to Washington figures, China is intentionally overvaluing the U.S. dollar by 40 percent. With China’s middle class now larger than ours and their economy’s annual growth rate near 10 percent, the IMF is forecasting that China’s economy will surpass the U.S. in real terms in 2016. This is ten years earlier than forecasted under current exchange rates. With this evidence I believe 40 percent is not even near the correct amount China is actually manipulating the exchange rate. Additionally there is more being imported into the U.S. economy than Chinese made products. Through the overvaluing of our dollar, China is exporting their inflation into the U.S. economy, right to the American customer.
Addressing the currency exchange rate would not be giving the U.S. a trade advantage over China. It would only be leveling the field to fair trade standards. Implementing a policy in rising stages that corrects the rate back to its natural state and allows adequate time for reinvestment and expansion into American manufacturing would drive our economy with good paying manufacturing jobs, and solve our budget crisis with increased tax revenues; all without raising taxes, additional stimulus spending, or adding to our deficit. This would naturally occur due to the weak dollar making it cheaper and more profitable to manufacture many items ourselves rather than importing them from China. Inflationary pressures caused by a surge in domestic manufacturing would be offset by the elimination of Chinese inflation being imported with each product. Even the products that continue to be manufactured in China would no longer transfer their inflation with them. Additionally we would see an increase in our exports due to growth in domestic manufacturing and the weak dollar. Eventually our dollar would regain significant value, but not until we have a healthy balanced economy.
With the increase in tax revenues through the resurgence in American manufacturing we would then have the proper funds to again lead and invest in technology and new energy development for the future.
Our state has been one of the hardest hit in manufacturing job losses. Ohio desperately needs strong elected State Representation that supports our working class while leading Ohio through our economic challenges, and understands state leadership’s role to push for policy change in Washington.