HOW CAN AMERICA RESTORE ITS INDUSTRIAL SELF-SUFFICIENCY?

The wealth that the US achieved in the early 20th century has been eroded by encouraging other countries to build their industrial base while not taking care to insure a domestic industrial future for ourselves.

This has been extensively documented and is evidenced by 30 years of trade deficits and the largest ever recorded trade deficit of $617 Billion last year and a current account deficit of $665 Billion - the US simply does not produce what it needs to sustain itself.

WHAT CAN WE DO TO CORRECT IT?

Awareness of our failing domestic industry

US consumers of many products including capital equipment now find that foreign imports or foreign-owned domestic producers provide a better value or quality than domestic counterparts, if those even exist.
Other countries are taking unfair advantage of our free markets

Our current policies are failing to stimulate competitive domestic industries sufficient to sustain the US. We cannot cope with predatory practices of China and Japan, who take advantage of our free and open markets but themselves utilize subsidies, protectionism, and below-cost pricing to undermine and destroy our industrial base.

These unsustainable US trade deficits for 30 years are destroying this country. To remain a world class productive country, major (perhaps revolutionary) changes need to take place, taxes, subsidies, and/or tariffs as needed. There are several options, for example:

1) Protectionism

By closing the trading borders, domestic demand may be met with increased industrial domestic investment. However, in limiting foreign goods, US consumers will not be able to afford much needed goods until domestic industry catches up. There is also the risk of encouraging domestic monopolies.

2) Government direct investment

For industries that do not provide sufficient return for risking private capital, there should be a way to employ public money to benefit the entire country. This is what happens with government healthcare programs,
military, public transportation, and other national security programs. There should be some mechanism to insure that core commodity industries (like steel and transportation) that form the basic platform for a self-sufficient industrial country should be maintained even if these commodity industries themselves are not profitable to private investors competing against foreign subsidized state-run companies. Examples from other countries

Japan through its Ministry of International Trade and Industry (MITI) has very successfully helped provide leadership and assistance for development of industrial productivity and employment while maintaining a flourishing capitalistic economy. According to the Federation of American Scientists (FAS), "MITI facilitated the early development of nearly all major industries by providing protection from import competition, technological intelligence, help in licensing foreign technology, access to foreign exchange, and assistance in mergers."

MITI is a successful case study in how the Japanese government can work with its industry to stimulate core sectors that serve the entire country without attempting to establish a centrally planned economy.

The FAS continues: "MITI served as an architect of industrial policy, an arbiter on industrial problems and disputes, and a regulator. A major objective of the ministry was to strengthen the country's industrial base [by encouraging investment through incentives and selection of most needed products and development procedures to be developed that would benefit their most important industries like steel and robotics]. It did not manage Japanese trade along the lines of a centrally planned economy, but it did provide their industries with administrative guidance and other direction, both formal and informal, on modernization, technology, investments in new plants and equipment, and domestic and foreign competition."

Take the best that other countries have to offer and refine it with our own experience and objectives. By doing nothing we are bound to be buffeted by those other countries that have a strong plan to continue to dismantle our industry and economy.

The results speak for themselves
Industrial success has led to a Japanese $181 Billion current account surplus with the rest of world last year compared to a US $665 Billion current account deficit with the rest of world. Japan has used intelligent planning as opposed to our unplanned industrial regression (e.g. the auto industry). Japan is accomplishing this from a zero base of ashes from the end of WWII with 4% of our land area, 40% of our population and no natural resources. Their example shows there are better ways, that major changes should take place immediately or we will soon be relegated to a 2nd class power with a much lower standard of living.

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