It's Time to Stop Playing the Blame Game

Thanks are in order to Walter Williams, the Philadelphia-born George Mason University economist and holder of a doctorate in economics from U. of C., LA, for shedding some light on the whole economic and trade issue regarding China—what I’d like to call the “Economic China Syndrome,” so to speak.

It seems, if you speak to the common man on the street, as well as those who should know better but don’t, that China is one of the root causes of all of our economic woes in America due to the massive imbalance of trade and the total saturation of our retail market with “Made in China” products. We no longer manufacture anything in the U.S. and so buy all our of products from China which is aided and abetted in destroying our economy and manufacturing infrastructure by that evil American low-wage employer, Wal-Mart, right?

Nancy Pelosi, if you can trust anything she says, suggested that we need tariffs against China so we can bring it all home and build a “Make It in America” economy. Harry Reid, another gem of our political class, slammed his Tea Party-backed challenger for his Senate seat as the “foreign worker’s best friend,” a direct reference to whatever her economic policies entailed that he tried to use to scare people. Even our president, who would never pass up a chance to manufacture a crisis that he could use to forward his radical policies, piled on board when he stated that China “has been very aggressive in gaming the trading system to its advantage” and that we need to take action against China and any other country that manipulates its currency to give itself an unfair advantage … not that we would ever do anything like that. Just sayin’.

Even some of the latest batch of Republicans seems to be getting on board to get as much traction as possible from this issue. It seems that it is easier to continue to propagate a fallacy to one’s advantage rather than take the time to actually get to the truth of something and actually explain it in plain words. That would never get votes. I will agree that many people find it too difficult to think things out to logical ends and so are much more willing to get their information via sound bites whether true of false; more important is whether said sound bites have the correct amount of emotional appeal.

Okay, so what’s the real deal? How hard would it be to believe that the "vast majority of goods and services" sold and consumed in the U.S. are actually produced here? Does that fly in the face of what you want to believe? Ouch, that pretty much removes a large basis for a majority of whining that goes on in the good ole US of A, and lately, if we’ve proven anything, we’ve proven that we are very good at whining and blaming others for what we have brought on ourselves. And why not? Our Blamer–in-Chief, Barack Obama, has been blaming George W. Bush for three years and has yet to stand up and take responsibility for anything.

Imports into the U.S. comprise 16 percent of our gross domestic product. How much of that came from China? 2.5 percent! Let me be perfectly clear here: Imports from China make up 0.32 percent of our gross domestic product. Allow me to draw this picture another way: 88.5 percent of consumer spending in this country is on items made here in the U.S. Unbelievable, right?

The fact is that products imported from China consist mainly of furniture and household goods, other miscellaneous durables, and clothing and shoes. Getting down to real numbers more easily understood: Of all the clothing and shoes purchased here in the U.S., 35.6 percent sport the “Made in China” label. Indeed, much of what does sport that label contains a very considerable portion of "local content” anyway. An example in order to clarify: The price of a pair of sneakers "Made in China" that retail for $70 includes transportation in the U.S., store rental space, marketing costs including salaries and benefits for U.S. workers involved in retailing the sneakers, and profits for shareholders of the U.S. retailer selling the product. On average, fully 55 ¢ on the dollar of the retail cost of goods "Made in China" is money that stays right here in the U.S.

Does the U.S. have a manufacturing infrastructure of any magnitude? You wouldn’t think so based on all the demagoguery and rhetoric concerning the demise of manufacturing in the U.S. In fact, for the year 2008, the U.S. manufacturing sector expressed as a separate economy with its own gross domestic product ranked even with the country of Germany as the world’s fourth largest economy.

We owe Mr. Williams a debt of gratitude for bringing this information to light and you can check all these numbers yourself as reported in a recent (Aug. 8, 2011) publication, “The U.S. Content of ‘Made in China,’” by two economists at the Federal Reserve Bank of San Francisco, Galina Hale and Bart Hobijn.

Finally, Mr. Williams summarizes the situation by pointing out that as Americans we need to stop allowing ourselves to be fooled into thinking that China is at the root of our stagnant economy and the source of our unemployment dilemma. The real culprit is the manner in which our government, both Congress and the White House, continues to meddle with the U.S. economy. One has only to look at the latest fiasco of our Democrat-controlled Senate putting forth a plan that extends the payroll tax cut for 60 days. Have any of our senators who proposed this ever held a long-term job in the real world? Do they realize the burden this puts on businesses to keep re-doing their books to accommodate the ever-changing tax structure? John Boehner is absolutely correct in refusing this charade of a bill that, if not passed, Mr. Obama claims will cost the average taxpayer approximately $1,000 in increased taxes. Can someone please explain to me the math of how 60 days of payroll tax cuts (that equals 8 to 9 paychecks) saves me $1,000 in payroll taxes?

Say it again, Ronnie: “Government is not the solution to our (current economic) problem; government is the problem.”