Businessman Warren Buffett, who is generally credited with knowing a whole lot more about the economy than anyone else, including Fed Chairman Alan Greenspan, is terrified about the size of the U.S. trade deficit.
The deficit has reached record levels: Last year, the U.S. imported $670 billion more in goods and services than it exported. As Buffett notes, that creates a situation where Americans no longer control their own destiny because foreign investors own so much of this country's debt.
Referring to the $670 billion trade deficit, Buffett recently wrote, "That is a staggering figure and one that has important consequences. The balancing item to this one-way pseudo-trade - in economics there is always an offset - is a transfer of wealth from the U.S. to the rest of the world. The transfer may materialize in the form of IOUs our private or governmental institutions give to foreigners, or by way of their assuming ownership of our assets, such as stocks and real estate. In either case, Americans end up owning a reduced portion of our country while non-Americans own a greater part. This force-feeding of American wealth to the rest of the world is now proceeding at the rate of $1.8 billion daily, an increase of 20 percent since (2003). Consequently, other countries and their citizens now own a net of about $3 trillion of the U.S. A decade ago their net ownership was negligible."
While most of the media continue to promote the fantasy that free trade policies are good for the economy, Buffett takes a dramatically different - and far more realistic - view.
He sees a future in which America will be "perpetually paying tribute to their creditors and owners abroad," and he suggests, "A country that is now aspiring to an 'Ownership Society' will not find happiness in - and I'll use hyperbole here for emphasis - a 'Sharecropper's Society.' But that's precisely where our trade policies, supported by Republicans and Democrats alike, are taking us."
If America is to remain a prosperous and independent country, Congress is going to have to stop approving trade agreements that benefit multinational corporations but undermine the interests both of the United States and of developing countries, where the free trade regimen has led to wage stagnation, environmental devastation and the worst sort of labor and human rights abuses.
And the best time to begin is now.
On Wednesday, the Senate Committee on Finance is expected to hold a hearing on the Central America Free Trade Agreement.A House committee may also hold a hearing that day.
CAFTA would effectively extend the current North America Free Trade Agreement - which includes the United States, Canada and Mexico - into Latin America and the Caribbean. The idea of extending NAFTA, which has led to the loss of hundreds of thousands of U.S. jobs, done serious harm to many sectors of the agricultural industry and contributed mightily to those trade deficits that so frighten Warren Buffett, ought to terrify any thinking American. It certainly terrifies workers and farmers in Central America, who have been actively organizing against the initiative. But the corporations that seek to increase their profits through friendly trade rules will be pouring millions into a pro-CAFTA lobbying effort.
Congress needs to hear an alternative message. On Wednesday, critics of CAFTA are calling members of Congress to urge them to oppose the agreement. To find out where Wisconsin representatives stand and how to contact them, visit www.wiscotrader.org/action or call the Wisconsin Fair Trade Coalition at 608-237-1659.
© 2005 Captial Times
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