Salvaging The "Stimulus" Package
March 10, 2008
By Christopher G. Adamo, www.chrisadamo.com
Nobody should be surprised to see side-by-side headlines proclaiming that oil is hitting record prices while the dollar is dropping to new lows against foreign currencies. The pieces fit. As America is forced to expend ever more of its monetary supply in order to procure basic commodities from other countries, foreign powers gain greater and greater control of our wealth and our destiny. Consequently, our bargaining position on the international economic scene grows weaker.
Much of the inflated price of crude oil directly results from the looming threats of Iran's Mahmoud Ahmadinejad and Venezuela's Hugo Chavez, both of whom have hinted at the prospect of cutting supplies in the event of adverse policy decisions by the United States. In other words, our dependence on their product, in this case petroleum, will leave us at their mercy if hostilities flare.
The situation would be entirely different, had the U.S. pursued a wise energy policy that recognized the importance of strong domestic energy production, instead of kowtowing to the radical environmentalists who diligently endeavored (with disturbingly great success) to put virtually all new American oil drilling and refining off limits.
Where America once dealt from a position of strength, and might still be doing so, it is now indefensibly vulnerable to the likes of Ahmadinejad and Chavez. And at some point, either this current generation or its posterity will either fix these blunders or pay dearly for such shortsightedness.
Things are much the same on the manufacturing front. During his run for the Presidency, Congressman Duncan Hunter (R.-CA), perhaps the only true conservative to have entered the race, told of a critical component of American "smart bombs" that has been purchased from Switzerland.
At some point during the Iraq war, the Swiss decided that as a result of their opposition to U.S. actions, they would no longer sell the part. From a military perspective, this act was no less effective or devastating than a surgical bombing of an American munitions factory, rendering it incapable of further production.
Posing comparable risks, but on a far wider scale, American refineries and mills are no longer building, growing, and modernizing to the degree necessary to maintain an ongoing production of day-to-day commodities, but are falling instead into disrepair and eventual ruin. As such, they will eventually be in no condition to suddenly ramp up production in the event that a truly large scale conflict emerges on the world scene.
Americans can hardly imagine the degree of hardship and deprivation that could befall them from a full fledged trade embargo conducted by hostile foreign powers. Many have already shown an ominous willingness to flex their economic and political muscle against us. And the only defense against this fate is to ensure that American industry stays sufficiently vibrant to respond to such a blow.
It is crucial to recognize that none of this should be interpreted as a pitch for "protectionism." Wall Street types understand all too well the ravages on an economy that is hamstrung by self-serving bureaucratic interests whose only real goal is to enrich and empower themselves by constructing arbitrary and artificial trade barriers.
Yet while many advocates of open trade accurately decry American protectionism on the basis of how it can harm both U.S. interests as well as those of the countries with which it trades, they seem deliberately oblivious to the equivalent fact that such actions, when perpetrated by foreign governments, can similarly inflict great damage on America's industrial base.
The mere mention of a desire among Americans for reciprocity in treatment results in immediate accusations of "protectionism." These economic utopians would rather look solely at the next quarter's bottom line, and presume from escalating numbers there that all is well on the economic front.
Such individuals, including many who claim the mantle of "conservatism," gauge America's entire heritage, virtue, and ultimate worth by evaluating it primarily, if not solely, in dollars, thus cheapening its real merits in terms they neither cherish nor even understand.
Currently, China is involved in the artificial suppression of its currency, thus lowering the prices of its products, in order to maintain an unfair advantage in trade deals with America. Some myopic economists view this as a good thing, since American consumers "benefit" in the immediate sense from lower prices on Chinese imports.
Nevertheless, the long term effect is ominous. China makes no benevolent effort to further trade at its own expense. Rather, like a loan shark, who is inarguably "poorer" at the end of the initial transaction, China anticipates an eventual gain that is well worth the price they currently sustain. It is thus willing to offer a few extra trinkets to the feeble natives in exchange for the wealth and enduring properties of this nation.
So, what does all of this have to do with the recently passed "Stimulus Package," ostensibly implemented by Congress to improve the economy? For starters, it must be understood that this measure bears only a minuscule resemblance to the federal tax reductions which spurred the lagging economy during the early part of the current Bush administration.
Whereas tax rate reductions allow actual earners to keep more of what they have produced, the "Stimulus Package" amounts to a governmental redistribution of monies that it confiscated from the producers. Instead of bolstering the concept of private property, it promotes the notion of a governmental "sugar daddy" who hands out goodies as he sees fit.
Despite its actuality as merely an extremely costly election year gimmick, many Americans will understandably be elated to receive something from a government that has all too often only cost them money. And as such, it portends some good to the American people. But what they do with this windfall may determine its real worth in bolstering the economy.
Sadly, much of it is liable to quickly make its way across the Pacific, and thereby end up "stimulating" the Chinese economy, with little or no benefit to Americans other than the ownership of some disposable trifles. Such things will eventually wear out and be discarded while the currency offered to purchase them continues to flourish within the Chinese economy.
How much better it would be for this admittedly ham-fisted attempt at shoring up our sluggish domestic economy to be turned into a surge of American dollars that continue to circulate within American shores. Admittedly, this scenario could only result from Americans who purposefully determine to spend their "stimulus" checks on American products.
Some might ponder how an individual decision to follow this course could yield any tangible effect against the immense tide of the world market? The best response is another question: What good results from a solitary vote, when resolutely cast on principle?