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3 Million New Jobs in the US

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Listening to me make a problem harder than it had to be my Dad once said "You are your own worst enemy."

I don't think he invented that line or that I was the first person to overlook a simpler solution. I imagine we all end up in those situations sometimes. Our present unemployment problem is largely one of those.

Americans need more jobs and better jobs. And yet we don't balance our trade deficit.

What has the trade deficit got to do with jobs? Well, actually, a lot.

When a business grows it creates jobs. When a business shrinks, it loses jobs.

Exports grow US businesses. Imports shrink US businesses. On balance has trade increased or reduced US unemployment?

Opinions may differ about the other benefits of trade, but few dispute that as of now we have lost more jobs than we have gained - millions more.

To see one way in which our trade policy is inadvertently creating mass unemployment, consider the impact of our trade deficit on US unemployment in 2014.

In 2014 the US imported about $500 billion more than we exported. That means US businesses lost $500 billion more in sales because of imports than they gained in sales through export.

What effect does losing $500 billion in sales have on US jobs?

3 million lost jobs.

With current unemployment at about 7.9 million Americans, unbalanced trade is the single biggest part of our unemployment problem.

It is not unusual that we lost sales in 2014. In fact, the last 50 years have been an almost unbroken string of trade deficits for the US.

No one in the US directly benefits from massive trade deficits. So why do we keep at it?

I suspect there are two reasons. First, most of us don't realize that "balancing trade" is code for "creating millions of new jobs". Second, any alternative to "free" trade sounds like it will require a lot of government meddling. But balancing trade can be done simply and our freedoms of trade maintained.

Let's change our policy from "free" trade to "fair" trade. A fair trade policy does not specify what will be traded or prices. It does not impose any new duties or tariffs. It requires only that other countries buy as much from us as we buy from them. Imports and exports must balance.

When a US business sells to a trading partner, the partner will earn trading credits equal to the value of the trade. When a US trading partner exports to the US it will use trading credits equal to the value of the trade. If a trading partner wants to sell to the US but doesn't have the trading credits, it either will earn trading credits by importing something from the US or it will buy trading credits from a company that already has earned them.

Under a fair trade policy countries that under-buy US goods and services have two options - either buy more from us or sell less to us. Either way, US businesses get more sales and Americans get more jobs. 3 million more jobs.