Thursday, March 13, 2008

Granpa Graham's Corner: Economics 101

I've been thinking about the economic condition our country finds itself in and like lots of other folks I don't know the answers.

It seems to me that we had a broad base upon which our economy did pretty well. We had tariffs that helped our manufacturing base to compete with products shipped into our country. However, we began to tax corporations to the point where it became difficult to compete on price of product, despite the tariffs on foreign products. Our corporate taxes became much higher than in foreign countries under similar circumstances. (Remember the story of the goose that laid the gold egg?) As we introduced more and more socialistic programs where the government assumed more and more control over our lives and freedoms the government required more and more money to finance these projects. Intead of fiscal responsibility and fewer projects to spend money on, just the opposite was and is occuring. At this point it was not economically feasible to move the production of goods offshore, despite the taxation corporations faced.

Now along comes the economic theory of "free trade". Wow. NAFTA (North American Free Trade Agreement) is created. However, NAFTA goes beyond trade and has many other ramifications. The idea seems to have been to remove tariffs and allow free access to markets. A corporation can now import without tariffs. Now it is feasible to move offshore, hire cheap labor, reduce cost of producing goods and send those goods back to the USA where they can be sold cheaper than they could be made and sold in the USA. What does this do for the USA? The manufacturing of goods is lost, the employees who had jobs no longer have them, tax revenues are lost, the displaced workers must find new jobs, probably at a lower wage.There is less money available for the general economy. What does this do for the foreign nation? Everything we lost is now transferred to the other nation and the USA becomes dependant upon that nation to supply the goods lost. The economy of that nation is given a b oost. Have any of the candidates expressed concern and a plan that might help return manufacturing of goods to the USA? Value added tax? Reduction of corporate taxes?

It seems to me that we are driving down our economy and boosting the economy of other nations. Will we reach a point where we are totally dependent on richer and greater nations for our survival? When will the federal government stop borrowing money and living beyond our means? Actually the individual people of our nation must also stop borrowing and living beyond our means.

Where do the aspirants for the office of President of the USA stand on these issues? Will they "honestly" discuss their ideas about NAFTA? Do any of them propose more spending programs? Whom are we going to send to Congress in the elections? Will the Senators and Representatives we elect address these issues openly and honestly?

We, the people, are responsible for sending them to represent us and it is our responsibility to see that they do just that. But it wont be easy.

My intention is to get you to think about issues, not accept them at face value.

Granpa Graham

1 comment:

Cary said...

Granpa Graham, I have only heard one candidate address the issue of fiscal spending. From the other two I have heard a list of "giveaways" and they also intend to raise the taxes out the roof. I sure do feel like I am paying enough taxes now! I am tired of all the freebies provided by the U.S.A. and they want to give more!

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