WASHINGTON -- One of the big economic myths in this country is that the United States doesn't make much of anything anymore and has seen its exports dwindle overseas.
This is the story line being spread by left-wing politicians who ought to know better, labor-union bosses who have their protectionist agenda and economic nationalists on the right who want to raise tariffs (another term for government taxation) on just about everything we buy.
These people point to the continuing reduction in manufacturing jobs, a persistent trend over the past several decades, as proof positive that our manufacturing industry has declined as well. It is true there are fewer manufacturing jobs, but this is due to several strategic factors: outsourcing of service jobs to independent contractors and advancing technology that allows manufacturers to make products faster, better and more efficiently with fewer workers.
All of this is part and parcel of the increasing U.S. productivity from which our economy has benefited for many years -- trends that are not going to be reversed. If anything, they will accelerate as manufacturers seek new cost-saving innovations to find ways to reduce unit costs. That will mean lower prices for consumers and more competitive prices overseas in the global economy. As for those claims that U.S. manufacturing is in decline, export numbers tell a far different story. We are making more products and selling more of them abroad than at any time in our history. Consider these statistics from the Department of Commerce: U.S. exports grew by 13.1 percent in the 12-month period through November 2006, totaling $1.3 trillion. To put this number into sharper perspective, Germany's entire gross domestic product, the sum total of all its economy produces, was $2.79 trillion. India's GDP was $772 billion.
Our exports shot up to 11.2 percent of U.S. GDP in the third quarter alone, the highest level in dollar terms ever. "U.S. exports are booming," the Wall Street Journal reported.
But trade critics rarely mention these numbers, preferring to focus on imports -- especially from China -- and the trade deficit they say is destroying our economy. Don't believe it.
Yes, we buy a lot of imported goods and no doubt will buy more in the years to come as America's affluence rises, but this is a net positive for U.S. consumers and our economy overall. We haven't suffered from this trend; we've benefited from less expensive goods.
"For decades, the trade deficit has been a political and journalistic lightning rod, inspiring countless predictions of America's imminent economic collapse," said Bear Stearns chief economist David Malpass in a Wall Street Journal commentary. "The reality is different.