This is a quick drive by of why cheap imports are imploding the American Economy.
Back in the mid-80′ American made polo shirts were $45, brand name sneakers were about $100, a very nice TV was $800, and a decent couch was $1500 or so…eggs were .49 a dozen, milk was $1.79 a gallon, and bread was about .50.
Now we have replaced those American goods with cheap import that cost half as much. But, in real terms, the milk, eggs, bread have tripled in cost, so has the electric bill, the phone bill, and the water bill.
Prices on imported consumables are half as much, domestic consumables are tripled.
We spend far more on these domestic consumables than we do on the imported ‘durable’ goods. Therefore total family net out of pocket outlay is essentially the same.
In 1984 there were good paying manufacturing jobs, there was opportunity to make a good living making things. When a country makes things, they add multiple levels of value to the raw material and create wealth by selling finished products. In our ‘service economy’ (you want fries with that?) there is far, far less income opportunity. Real unemployment is at an actual 23% level.
What to do with all of these unemployed, how to ameliorate this income gap? Eventually they will get angry…easy, subsidize the income gap! Have you noted the increase in food stamps, SSI, disability, and other handouts? Where does that money come from? Well right now it comes from deficit spending to be repaid by The American Tax payer later. Repayment for these cheap imports. Your bill right now is $161,000. Enjoy that $500 Chinese big screen.
Total American debt is now THREE times GDP. THREE TIMES!!!! GDP growth is at .5% and unemployment is at 22% in reality.
Stop judging the quality of the economy by how cheap your i-phone is or by all of those Chinese bobbles that you can buy with that measly, stagnant paycheck. There has been 30 years of stagnant wages. This is a problem. A deflation or a standstill in wages is a direct indicator of an economy on life support and increases the number of Americans dependent on the government instead of out there making products and making a decent living from their work. If you graduated high school before the mid-80’s or so you remember what wealth from manufacturing looked like. Hint, it does not look like the ‘new normal’ of the last 30 years.
That 20 TRILLION dollar debt that we have is the gap in the economy from importing cheap goods and sending manufacturing jobs out of the country by so called ‘free’ trade. Adam Smith would spin in his grave if you pegged this on his idea.
This is insane and will stop one way or the other. We either collapse or we fix it. Fix it by bringing Manufacturing back to the US. Its not impossible. Yes, the price of goods will go up. Sometimes inflation is good. Rising wages are good, manufacturing at home is great. There will be growing pains as we ramp back up. But, if we don’t we are truly finished.