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Hugh Campbell
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Bipartisan Complacency is Destroying U.S. Economy! In Chapter 19 of the 1817 classic On the Principles of Political Economy, and Taxation, David Ricardo mentions , in addition to war, removal of capital and a new tax as destroyers of the comparative advantage which a country before possessed in manufacturing. Deferral of tax on foreign earnings by multinationals, as long as those earnings are not returned to the U. S. results not only the loss of U.S. tax revenue but it incentivizes the remove jobs and capital, which feeds upon itself to reinforce a downward spiral for our economy. China’s pegging its currency to the U.S. Dollar, in form this is not a tax, but in substance acts as a tax on all U.S. exports to all U.S. Trading partners, not just exports to China. The unresponsiveness of U.S. Political leaders to these changes that David Ricardo, the father of classical political economics, warned; has subject U.S. businesses and workers to a similar plight as the frog in the boiling water parable. “The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to ‘political turmoil.’ Pretty soon, I think there will be a big adjustment.” — Warren Buffett, January 2006
An America Lost in Squanderville. Regarding Christopher Caldwell ‘s review of Why ‘top dollar’ still runs the world he mentions how China is so dependent on a strong dollar this validates the contention that media coverage that China has kept it currency undervalued is a gross understatement, it has actually been keeping the U.S. dollar over-valued; which adversely affects all U.S. trade with all U.S trading partners, not just trade with China. In November 2003, Warren Buffett in his Fortune, Squanderville versus Thriftville article recommended that America adopt a balanced trade model. The fact that advice advocating balance and sustainability, from a sage the caliber of Warren Buffett, could be virtually ignored for over seven years is unfathomable. Until action is taken on Buffett’s or a similar balanced trade model, by the powers that be, America will continue to squander time, treasure and talent in pursuit of an illusionary recovery.
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Jan 18, 2011