Sweden, China, USA

A few months ago I heard the announcement that Obama proclaimed USA will double exports in five years.  My first thought was "how?" and second thought was, "when this fails, they'll have something else to blame Obama for..."

Obama does recognize that there are winners and losers to this policy, within the USA:

"I know the issue of exports and imports; the issue of trade and globalization; have long evoked the passions of a lot of people in this country," Mr. Obama said. "I know there are differences of opinion between Democrats and Republicans; business and labor; about the right approach. But I also know we're at a moment where necessity has tempered the old debates."

So, who cares, we have a crisis, and we'll have winners and losers, but politicians will not have to take the blame, because we are doing "something." But he leaves out what the rest of the world thinks, since the policy will create winners and losers overseas.

I waited for details on how we'd double the exports from USA in five years, since with the proclamation no details came forth.  What the above article says is government agencies will focus on helping exports. Oh. That's it?  That means government workers will travel overseas and attend trade shows, everyone will be offered forms to fill out to back an export business, and some well-connected campaign contributors will get taxpayer loans for exports, which will go bad, and leave the taxpayer on the hook.  We've seen this all before.  It doesn't work.

There is another part.  The USA is trying to export inflation to other countries, to make USA export goods cheaper, on the theory it will make USA goods more attractive and help our economy.  Here is a nice summary of how it works.  The bottom line is other countries' citizens are supposed to pay the price for our bad policies.

China will not stand for it, and Brazil will not stand for it, as well as Europe.  Recognizing just how odious the USA policy is to most other countries in the world, China feels confident it can for good measure threaten European leaders not to attend the Noble Peace Prize event for a Chinese dissident.

#1 rule in exporting: most of your business is domestic.  If you hang you hat on exporting, the volatility pretty much assure failure.  If you want to save the USA economy, you must focus on the USA economy, not export economies.  

What to do?  Cut the size of government, defined as cost and regulation,  back to the last year the economy was good:  2000? 1990? 1980?  1840?  And cut the tax base as well.  For example, if we cut the government back to 1990 levels, we would not need the federal income tax. There are enough other taxes to cover what would be "government." This would result in massive layoff, and a return of our troops from around the world. So what happens to all these now unemployed?  (Privately, as an importer, I'd like to see USA fed government be limited to import taxes for lifeblood.  US Customs again becomes the leading USA govt agency.)

The solution is small business renaissance. But we do not have the cultural capital, that is to say enough people who know how to run a business, to take up the slack necessary to provide for the division of labor to feed clothe house and otherwise provide for these fish out of water.  Two generations of mal-investment economy has wiped out the cultural capital it takes to farm, fish, manufacture, bank, build, design, transport etc.  at the small business level.   

What farmers and fishermen and small business people there are will do very well, since our relatively rare skills will be priced at ever increasing bids.  Most consumers will not be able to afford us.  But enough will for us to thrive.

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