Trade Gap: We're Our Own Worst Enemy

http://www.portfolio.com/news-markets/top-5/2007/07/12/Trade-Gap-Swells

Yes, as this article reports, the trade deficit is swelling. It was $60 Billion in May 2007.
The weaker dollar (the currency gap) is not the only reason for a wider trade deficit. Other causes are cheaper overseas labor and manufacturing jobs going to foreign countries where there’s less environmental and workplace regulation. To stay competitive, U.S. firms have moved manufacturing operations overseas where labor costs, including health care and retirement benefits, have less impact on the total cost of making goods.

A significant level of functional illiteracy relating to U.S. high school graduates and differences in the quality of primary and secondary education systems is also encouraging U.S. employers of manufactured goods to move operations and jobs overseas further devaluing U.S. competitiveness and the U.S. dollar. Add to all of this a weak work ethic by both labor and management and you have a recipe for the size of our trade deficit. Without real measurable improvements in U.S. primary and secondary public education, and work ethic, U.S. competitiveness and the value of the U.S. dollar will continue to erode.

Now you might think that continuing erosion of U.S. dollar buying power is somehow good for the trade deficit imbalance because it is supposed lead to more U.S. exports. I disagree! If a weak currency were the primary reason for an increasing level of exports, the diminishing value of the dollar and the increasing value of other currencies would logically lead to export increases. That has not occurred.

In fact, much of the products manufactured in the U.S. are seen by the buying public worldwide as less reliable and technologically inferior than the products of Non-U.S. competitors. I believe that national governmental and corporate managerial arrogance as reflected in engineering and design standards combined with work force inefficiencies have led to most our current situation.