How to mostly fix the trade imbalance

Discussion in 'Politics' started by rcanfiel, Dec 24, 2007.

  1. It seems like one way to fix the trade imbalance, is to make imports and exports reflect the total cost of doing business (this example is the USA, but every county would be free to set their trading boundaries)

    So, this is my proposal

    #1 Balance the environmental cost

    If western countries are going to have a carbon or emissions costs, then this should a builtin cost levied across goods/services produced by all industry, not just American firms. If other countries save money by not being hit by the (future) American carbon tax, they will find that everything has a builtin 2 or 3% cost (whatever), so it is impossible to get out of paying. In other words, use coal because it is cheap, and you wil still have a builtin environmental 2-5% levy on all goods and services. This also covers things like toxic site amelioration, and anything else related.

    #2 Balance mandated costs

    Workmen's comp, health insurance, vacation&holidays, minimum wages, retirement, etc.

    In other words, if the minimum wage in the USA is $7 an hour, why should workers in Asia make $2 a day be allowed? Same argument - when illegal roofers avoid paying workmen's comp, they are subject to heavy fines. Why should other countries then have the advantage of no WC and undercutting the US worker? Mandates are mandates.

    So every good or service has a builtin cost that reflects normal industry mandated cost of business. So WC, healthcare, holidays, retirement, social security/medicare, and other costs are levied on (builtin to) goods and services. Everything beyond can be additionally paid by American firms. But it takes a nick out of "ultracheap" overseas banana republics, who have minimal worker benefits or protections.

    Example, you buy anything, it has a builtin 15% levy that covers WC, SS, medicare, basic retirement/401K, 25 holidays/vacation/sickdays a year, minimum wage, etc. Then this cost is removed from American workers and American companies. The levies they pay will be used to cover these national services.

    There will be a LOT of extra money, since now all the foreign goods from cheap sourcers will now have to play on a more level playing field.

    There will be a lot less incentive to offshore work, since the cost reduction is a lot less.

    Foreign countries that demonstrate higher worker benefits and environmental costs reductions, can apply for a lower builtin levy. In other words, switzerland pays far more social costs than India. But it is up to THAT country to prove their compliance on these...