For too many months and years, our economy has been in shambles, especially in Michigan.
Here, not only cars but also other goods like washing machines, once the foundation of a dynamic and strong economy, have been hit hard in the past 10 years. Everyone has his own solution to solving our state and our country’s economic malaise, but most of them are wrong.
Many common themes include cutting personal and business tax burdens so that people will have more money to spend, but the economy has been better before when the tax burden was far higher — just look up what income taxes were in the ’50s and you’d think everyone was in the poor house.
Others will argue that we need a more educated workforce; that improving education from kindergarten through college will help individuals earn more money and improve the economy. But this is not only slow (it takes a long time to move through the school system), but the average American is better-educated than ever before and yet still faces terrible prospects for employment.
As much as everyone would love lower taxes or better schools, they aren’t what dragged our economy down this past decade. The Census Bureau estimates our lopsided trade relationship with China, which just edged out Somalia for my top 200 favorite countries list, has cost the United States nearly two million jobs in the past 10 years. With most of those job losses coming in manufacturing, it’s no surprise states like Michigan have been hit especially hard.
As standard of living and wages in China continue to improve, the only advantage China clings to in our one-way trade relationship is the extremely low value of their currency, which some say is worth half of what it should be if it were open to rising and falling like all other major currencies.
By keeping their money worthless, Chinese companies essentially get to sell their wares at a discount while American companies have what amounts to an extra tax on their products sold in the country.
The U.S. Senate is currently looking at legislation that would penalize countries the Treasury Department thinks keep their currency too cheap. The bill has bipartisan support but faces resistance from the White House and some conservative groups.