It is perhaps not surprising that, in a time when we have a President who claims to be saving us from the big spenders even as he doubles our national debt, we should be treated to such illogical claptrap as John F. Lawrence’s Nov. 2 column, “Don’t Panic Over the U.S. Trade Deficit.”
Lawrence’s premise is that deficits are really OK since a lot of people are benefiting from them and that most of the capital flows back to this country anyway. I guess Lawrence hasn’t noticed what is happening in Mexico, where they are “enjoying the benefits” of international indebtedness.
It is, of course, true that many corporations are not hurt badly by these new developments, since they have the option of moving operations overseas or investing in foreign competitors. The problem is that when they close down domestic operations, they are virtually destroying the lives of millions of American families who do not have the same option.
Companies rationalize this by citing a moral obligation to stockholders, who have put up investment money, but they feel no similar obligation to employees, who have merely invested their lives. It is a cruel irony that companies that move operations overseas do it for the purpose of selling in the American market to those people that they have abandoned.
It is probably true that much of the capital comes back as investments in this country, but not to the benefit of the people who have been harmed. Much of it is invested in shopping malls or high-rise luxury condominiums. Most of the rest comes back as investments in government securities, which actually adds to the insult.
This keeps down interest rates and allows companies the benefit of cheaper interest rates for financing overseas ventures. The employees who have been abandoned must put their whole family to work at minimum-wage jobs just to prevent foreclosure. I doubt if one could find a credible economist who would agree that destroying our industrial base, wiping out our middle class and adding more debt to our international trade account will help us. What can you say about a nation whose leading growth industries are medical care, litigation, fast-food franchises, lotteries and political consulting?