Imports Surge. Job Growth? Not So Much.

Gross Domestic Product (GDP) grew at a sluggish 2.4 percent annual pace last quarter, down from 3.7 percent in the first quarter. Imports, most probably purchased by businesses, surged 35 percent. The flood of imports reduced GDP growth by 4 percentage points, offset by a U.S. increase in exports of 1.2 percent, for a net negative impact on GDP of 2.8 percent.

(Click on the title of this post for my source, a recent report in the Christian Science Monitor.)

What do these numbers mean? Imported goods are not produced by American workers in American factories, many of which have closed their doors during this recession. Labor continues to look for jobs that are not there. American capital continues to be drained overseas by a steep balance of payments deficit. Tax revenues continue to under perform on federal, state and local levels.

Unemployment insurance, intended to bridge the gaps of economic and cyclical downturns, is turning into a long-term product with no end in sight.

It's a complex global economy out there. Complete economic self sufficiency is not possible and very likely not desirable; however, the crippling balance of payments deficits the U. S. has run for more than a generation are flushing this country down the toilet. They are the reason so many foreign governments own U. S. debt. The debt constricts our ability to deal with our internal problems.

We hear a great deal about ending the Bush-era tax cuts. This is probably a necessary if bitter pill to swallow. Nowhere have I heard suggestions of increasing tariffs on imports. There is a great deal of space between using imports as a source of revenue and "protectionism." A touch of carefully crafted protectionism might go a long way toward revitalizing American small industry. The multi-national corporations would not benefit, but the smaller, more innovative companies just might gain enough breathing space to get off the ground.

To see where the U. S. Government gets its revenue go to:
http://www.taxpolicycenter.org/briefing-book/background/numbers/revenue.cfm

It is interesting to note that both corporate taxes and excise taxes are below historical trends.

Why wouldn't an across-the-board increase of tariffs on imports be a good idea?