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8
S'fEADILY WOASENINQ
u.s.
TRADE
DEFICIT
,: ·,-1
EXPORTS MIIUS IMPORTS
The result? "Those early post–
World War
11
days when 'made in
U.S.A.' was a magic symbol," edi–
torialized one newspaper, "are now
as far away as the Middle Ages."
Business Week's
cover story of
August 29, 1983, painfully ex–
posed "America's Hidden Prob–
lem." What is it? "The nation
from 1870 to 1970 almost always
exported more than it imported.
1n the 1970s t h at b egan to
c hange, and now U .S. foreign
trade is ru nning $60 billion in the
red- 18
times
the figure in
1973. . . . [This] trade problem
could be the
economic disaster of
t.he decade."
The Enemy ls Us
Already 1.5 million lost American
jobs are the price tag for the nar–
roVI1ing of what economists call the
"productivity gap"-the shrinking
world market resulting when
Europe and J apan began to catch
up with the U .S. in the 1960s.
The
Plain Truth
printed repeated warn–
ings during those years that dili–
gence in the work places of Japan
and Germany would finally do to
America and Britain what a tragic
war could not do!
Now David A. Levy in
lndus–
try Forecasts
warns: "The trade
deficit will be a majar factor
leading the economy to lose
momentum in 1984."
And why the t rade deficit ?
Harvard's professor of busi-
ness, Robert B. Reich, blames a
combination of " misguided govern–
ment policies, myopic labor and
management practices, and grow–
ing foreign government interven–
lían in markets." Yet it all hap–
pened so gradually. While we all
enjoyed the good life in the 1950s
and early '60s, expecting more and
more from an economy slowly
undermined by obsolescence and
foreign competition, U.S. Presi–
dent John F. Kennedy warned that
Americans must "trade or fade."
He was rightly alarmed at the
hemorrhaging of the U.S. gold
s upply from 60 percent of the
world's total in 1944 to $20 billion
of excess cl a ims against it in
1962.
Then carne the Space Race,
Great Society spending, Vietnam
and the siphoning off of thousands
and thousands of North America's
best brains into government re–
search.
Joyride Over
The easy affiuence, creeping social–
ism and continued high expectations
drove government and prívate citi–
zens into deeper and deeper debt. In
the 1970s we began to reap the
whirlwind. August 15, 1971: Presi–
dent Richard Nixon, facing more
than $60 billion in claims against the
dallar, mostly from foreign competi–
tors, shut the "gold window." No
Jonger would the United States
exchange dollars for gold.
What was obvious for years was
now official policy: the U.S. dallar
was no more "as good as gold!"
No longer pegged to the pricc of
$35 an ounce, the dallar was deval–
ued, then floated , encouraging the
expansion of paper money through–
out the decade. Next carne the
abrupt end of the era of cheap ener–
gy triggered by the Organization of
Petroleum Exporting Countries
(OPEC) oil embargo in 1973-74.
The oil embargo also made fertiliz–
er- with its clase relationship to
oil-based chemicals- more expen–
sive, especially for Third World
countries.
T bree pillars of the United
States' postwar dominance were in
ruins- control of the Weste rn
world's gold supply, a dedicated
work force and an era of cheap
energy.
Cheap immigrant labor, women
entering the marketplace in droves,
the escalation of computer technol–
ogy- these added hammer blows
helped fashion the high U.S. unem–
ployment picture of the 1980s.
Enter Reaganomics
As government deficits escalated to
pay for cost ly funding programs,
prívate corporations found them–
selves vying with government for
investment capital. By the mid-
1970s city governments needed
huge transfusions of credit just to
pay their interest. New York's
near-default in 1975 was a chilling
example. Bankers, alarmed, raised
interest rates as insurance against
future defaults.
Government borrowing and give–
aways plus the average North
(Continued on page 36)
The PLAIN TRUTH