Republicans for the National Interest applauds the following open letter to the President from Kevin Kearns of the U.S. Business and Industry Council. The present focus on ever increasing Wall Street bailouts and fiat money indebtedness serves an intrinsically Keynesian economic view, namely that government and consumer debt provides the fuel for growth in the economy; by contrast, we support the philosophy of Adam Smith, when he remarks in The Wealth of the Nations that real economic prosperity is to be measured by the level of domestic productivity of goods and services. The Republican Party historically has been a champion of such views and should return to that stance.
An Open Letter to President Obama, by Kevin Kearns
The 1,900 manufacturing companies of the U.S. Business and Industry Council are anxious to help you lead America and the world out of the economic crisis into a new era of genuinely healthy growth. Our members are reliable stakeholders in America – highly productive, innovative, non-offshoring manufacturers with long track records of investing in the United States and of creating good jobs here at home. We offer the following observations:
Yes, there is a crisis in the financial sector that requires attention, but there is a larger, cascading, and potentially more devastating crisis in the manufacturing sector, which unlike banking actually creates wealth.
To date, your economic team’s approach seems to be trillions for banks, but hardly a dime for manufacturing. You save wrong doing financial houses from failure, but send good faith, if sometimes poorly run, manufacturing companies into bankruptcy – a formula for disaster.
The current economic crisis is ultimately rooted in America’s longstanding failure to produce as much as it consumes. Without doing so, we cannot create the wealth needed to pay our way in the world and ensure a high standard of living for our citizens at home. Debt-financed “prosperity” was an illusion.
The only way forward is for America to make and consume more domestic products, and cut imports and the foreign borrowing necessary to buy them.
Congress and your Administration have forced the auto companies to submit detailed plans for reorganization, but the government has not put forth any detailed plans for a manufacturing-wide recovery.
No domestic company, auto or not, can create a business plan that counters the effects of foreign predatory trade practices: currency manipulation, VAT export rebates, government subsidies, IP theft, industry-government collusion, foreign cartels, dumping, closed markets, etc. This job belongs to Congress and the Executive.
For years, successive Congresses and Administrations have been unwilling or unable to address major trade cheating while our industrial and technology bases have been decimated – with profound national security consequences.
No domestic company will make major investments here at home only to face the same unfair foreign competition – even if the banks do start lending. This includes so-called green manufacturing, which faces exactly the same challenges as the rest of manufacturing.
The solution to our economic problems is not to print enough money to return to the previous unsustainable global trade regime. Rather, we must rebuild those parts of the U.S. economy that actually create wealth within our borders, and therefore restore a prosperity financed by earned income rather than by reckless borrowing.
To serve as the needed change agent, you will have to administer some “tough love” to our trading partners and a world economy still dangerously addicted to exporting to overextended U.S. consumers. This global Ponzi scheme is now over, whether we and the rest of the world admit it or not.
Mr. President, America can only overcome the economic crisis if domestic manufacturers receive the policy help they require to renew our productive capacity, to end foreign trade cheating, and to restore balance to global markets.
