February 12, 2008    Volume 15, No. 3

Search Back Issues
Guest Editorials
Trading Exchanges
About Us

Lean Machines Sixteen Case
Studies On Lean
From Manufacturing &
Technology News

Free e-mail newsletter

Guest Editorial: The United States Must Prepare For Its Day Of Reckoning

By Jack Davis, CEO of I Squared R Element Co

Asian leaders that dupe American leaders and take advantage of the country's free trade policies with their predatory trade policies are draining the United States of its economic wealth. The communist Chinese leaders take offense to our superpower status and show hostility to our naval fleet in oceans bordering their shores.

China does not have to fight a war to have the fleet go home. It is much easier and less costly to mislead and deceive U.S. government officials into making decisions that have and are continuing to destroy our wealth-producing manufacturing capacity. Cheap labor, the visions of large markets and the greed for profits have seduced our transnational corporate owners and managers.

They outsource labor, capital, technology, R&D, manufacturing know-how and trade secrets. They have and are continuing to dismantle our wealth-producing industries. These owners and managers have no loyalty or allegiance to the United States. As our economic strength declines, so will our Navy's presence in the Pacific and our ability to defend our country.

The Chinese have already accomplished so much economic damage. It is dangerous and frightening.

We had a total trade deficit of $764 billion in 2006 -- a new record. With China, the trade deficit was $233 billion -- the largest ever with a single country. For the last five years, the U.S. trade deficit with China has increased by 20 percent each year.

Trade is necessary for America to prosper but it must be balanced trade. Our total national debt is $9 trillion: $5 trillion of that is owed to foreign countries and $1.3 trillion of that to China. These numbers are pointing to an economic crisis.

Both the trade deficit and the debt owed to foreign countries show the United States is living beyond its means. A $764-billion-a-year trade deficit equals $2 billion of the country's wealth leaving every day. We are borrowing $2 billion dollars a day from foreign countries to maintain our standard of living.

If you have a successful career but lose your job you still may have credit available on credit cards and ownership in your home and car. Thus you can continue to maintain your standard of living -- for a while -- by increasing debt on your credit card or refinancing or selling your home and car.

But just as a person cannot continually increase debt, neither can a nation. The key difference between a nation and a person is that a nation can print money and delay the day of reckoning. Eventually, foreign countries will not accept pieces of paper with pictures of past American presidents on them of decreasing value for their products or in payment of debt.

The U.S. dollar in the last seven years has lost more than 50 percent of its value in relation to the euro, and it will continue to decline in value. At some point, the U.S. dollar as the world's reserve currency will be replaced.

In addition to the $5 trillion we owe foreign countries, foreigners also own or control over 8,000 U.S. companies with a value of over $8 trillion. Many of these companies were bought with the intent of gaining global control of key technologies and raw materials needed to produce advanced weapons: airplanes, computers, satellites and intercontinental ballistic missiles.

Most Americans believe the United States is a superpower. It is only our military that is a superpower. Our economy is Second- or Third-World class.

Most Americans don't see or understand the emerging economic disaster. Our government officials continue to encourage companies to offshore research and development, engineering and manufacturing.

The Wall Street Journal reported on December 20 that the U.S. Treasury Department once again declined to designate China a currency manipulator. All the numbers indicate that the Chinese yuan is 20 percent to 50 percent lower than its true market value when compared to the dollar. This is no accident. The Chinese are currency manipulators. Their cheap currency provides exports from China with a large price advantage when competing with U.S. companies. This causes many U.S. companies to fail or be so weakened it permits foreign companies to buy them at a large discount.

China also promotes exports and discourages imports. They keep wages low, rebate value-added taxes on their exports and charge value-added taxes on imports. They counterfeit and steal copyrights, trademarks and patents. They provide domestic industries with local tax incentives, offer special financing and charge tariffs on imports. They target specific industries to monopolize.

No U.S. company can compete with these predatory practices, all of which violate World Trade Organization regulations. Yet, the U.S. Departments of Treasury and Commerce fail to take action against China.

American politicians made a terrible mistake in 1996 when they voted to join the WTO. Joining the WTO gave Third World country bureaucrats control over U.S. international commerce. It is very difficult for the United States to win a case at the WTO. Most foreign country bureaucrats dislike the United States. Also, many are as corruptible as the bureaucrats at the United Nations have proven to be. The chances of the U.S. getting fair treatment at the WTO are remote.

The U.S. Constitution states; "Congress shall have the power to regulate commerce with foreign nations." But Congress gave control of foreign commerce to the WTO. Congress must do what the people elected them to do, and what they were sworn to do: "regulate commerce with foreign nations."

Congress must immediately cancel U.S. membership in the WTO. If it does not, Asian countries will continue their predatory trade practices, continue destroying or buying U.S. companies, continue financing our debt and continue buying our country. They will do this until we have nothing left to sell -- no industries, no real estate and no natural resources.

The U.S. government will then have additional trillions of dollars of debt and go bankrupt. Social Security, Medicare and pensions will be without funds. All of our wealth-producing industries, mines and farms will be foreign-owned. The government's ability to tax will be significantly reduced along with its ability to defend our country.

The career politicians we sent to Washington still don't see or understand the coming economic crisis. None of the leading presidential candidates from either party seem to be aware of the coming economic crisis.

Wake up America, our day of reckoning is coming.

-- Jack Davis: With age, I am 75, comes understanding, knowledge, experience and wisdom. I have 53 years experience in manufacturing and foreign commerce. I have worked for Fuller Brush, Westinghouse Electric, Ford Motor, Chevrolet and Carborundum in production, sales, engineering and management. I served in the Marine Corp and U.S. Coast Guard as a commissioned deck officer. I am a graduate engineer, entrepreneur and founder in 1964 of the I Squared R Element Company which I still own and manage. I Squared R is a successful company based in Akron, N.Y. that manufactures silicon carbide and molybdenum disilicide heating elements used in high-temperature electric furnaces. We are the largest U.S. manufacturer and ship heating elements to all the major industrialized nations of the world. I remember the depression and poverty. I remember the surprise vicious attack on Pearl Harbor. I remember the fear of possibly losing World War II. History repeats itself. (JRDAVIS@isquaredrelement.com, 716-542-5511)

Provide us with a comment on this article.

We'll notify you as issues and free stories like this one appear on this site. Sign up for a content-rich, e-mail newsletter. (You will NEVER receive spam.)

Please consider subscribing to Manufacturing & Technology News. You will have access to all back issues dating to 1998, plus receive the current issue electronically and via regular mail. It is all original reporting on the most important stories facing U.S. industry. No advertising. The cost of a new subscription is $395 per year.

Scan Back Issues | Reports & Analyses | Comments | About Us | How To Order

Copyright © 2007, Publishers and Producers.