As you probably know I do all of my foreign policy blogging at Outside the Beltway but IMO this particular post straddles being on foreign policy and being on domestic policy so I’m posting it over here. Recently, I read a rather bitter comment, complaining about President Obama’s statement in his State of the Union speech this year about his desire to increase our exports sharply. The comment was to the effect what in the world did we produce that anyone would want to buy?
I found this yet another example of how people’s lack of accurate understanding of our role in the world economy leads to completely looney views. Would it surprise you to learn that the United States was the third leading exporting country, behind only China and Germany? That exports comprises such a small proportion of our total economy is more due to the sheer size of our domestic economy rather than to any lack of exports.
We’re also the world’s leading importing country which explains our adverse balance of payments.
What do we make that people in other countries want to buy? The list is large. Aircraft, semiconductors, pharmaceuticals, automotive accessories, and industrial machinery lead the list with things like fuel oil and agricultural products coming up fast.
We’re also a top exporter of services.
Other examples of things that people know that just aren’t true:
- Manufacturing in the U. S. is declining. The truth is that we remain the foremost manufacturing country in the world as we have been for the last sixty years.
- We don’t produce much oil in the United States. Actually, we’re the third largest oil producing country in the world, behind only Saudi Arabia and Russia.
- This U. S. needs ever-increasing amounts of oil to maintain its lifestyle. In reality oil consumption in the U. S. has been virtually flat for a decade while our population has increased. In other words per capita consumption has been going down. Meanwhile, our gallons of oil per incremental dollar of GDP has been declining dramatically. This is in sharp contrast to China where consumption has been going up, per capita consumption has been going up, and oil consumption per incremental dollar of GDP has been increasing. BTW, the UK’s and France’s oil consumption have been flat, too. Germany’s has gone down pretty sharply.
The role of productivity increases in manufacturing has been one of the most under-reported things I know of. It’s probably a much bigger factor than outsourcing in explaining the decline of manufacturing work.
True, although our oil production has largely declined – with a brief upsurge when the Alaskan fields came on tap – since about 1971.
Dave, have you seen this on exports?
There was an interesting story about this on NPR last week. I was not aware of this, but there’s actually a State Department Office that’s charged with helping U.S. businesses smooth the paperwork they need in order to export their goods. Turns out, they’re having problems actually getting businesses to want to export in the first place–there’s a strange cultural barrier to it that they’re trying to figure out. NPR went at length about how it’s even difficult to get businesses to even sell across the border into Canada. Not because there’s no market for the goods, but because the business owners aren’t interested in trying in the first place.
I’m in favor of increasing exports and, further, I believe that the best prospects for increase are agricultural goods. However, any thought that we might double our exports, for example, are simple innumeracy. Either that or there’s a plan afoot to devalue the dollar.
My target would be a 10% to 15% increase over five years. That’d be hard enough given the rising tide of protectionism.
Wasnt that a doubling over ten years? Not out of reach, just not likely.
Steve
No, in his State of the Union message President Obama claimed a doubling of exports over five years. Our present volume of exports is simply too great for that to be achievable.