Tags: Asbury | exports | small | business

Hiring Increases When Exports Rise

By    |   Thursday, 20 September 2012 07:40 AM

At one time, even though the economy was in severe distress, at least U.S. exports were on the rise. But now the U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced that exports in July of $183.3 billion and imports of $225.3 billion resulted in a goods and services deficit of $42.0 billion, up from $41.9 billion in June.

And July exports were $1.9 billion less than June exports of $185.2 billion.

There’s a pattern here, and it’s not a good one.

Benjamin Mandel, an economist with the Federal Reserve Bank of New York, wrote: “The U.S. market share of world merchandise exports has declined sharply over the past decade. Throughout the 1980s and 1990s, approximately 12 percent of the value of goods shipped globally originated in the United States; by 2010, this share had dropped to only 8.5 percent.”

Mandel attributes much of the export decline to a decrease in productivity, which he suggests might have a bearing on trade policy. He proposes that ineffective U.S. trade policies that close foreign markets or interfere in the promotion of U.S. exports will have a detrimental effect on the competitiveness of the export sector.

This is a direct reference to the inability of the United States to complete Free Trade Agreements (FTAs). Yes, three trade agreements were signed last year — with South Korea, Panama and Colombia — after years of delay. It is important to note these agreements were negotiated by the Bush administration.

Since this time, China has concluded 15 trade agreements and has 18 pending; while the United States now has a total of just 17 FTAs. Most nations have far more and are adding new ones each month.

Yet, the Obama administration hasn’t negotiated its first. Many believe this is because America’s trade relations have been outsourced to the labor unions with devastating impact. As we bury our heads in the sand, our competitors are racing past us. This is bad news for Americans looking for work.

A recent U.S. Department of Agriculture Economic Research Service’s study using bilateral trade flows from 1975 to 2005 among 69 countries suggested that the large number of FTAs that do not include the United States might be eroding America’s presence in foreign markets.

I was initially optimistic that President Barack Obama understood the value of exports when he set a goal of doubling exports in five years. But to hit that pace, exports need to rise by 15 percent a year. It’s not happening, and this is being offset by a rise in imports, which is only compounding the growing trade deficit.

What needs to happen to cure this? Small U.S. businesses, the spark plug for exports and job creation, need to get the support they need to open foreign markets to their products and services.

When other countries enjoy export advantages that the United States does not, the higher tariffs translate into lower demand, which cuts exports, which impacts job creation.

Exports supported approximately 9.7 million jobs in 2011. And the Small Business Administration estimates that 97 percent of all exporters are small businesses.

So the logical question is: if exporting small businesses create jobs, why does the Obama administration continue to ignore or even castigate small business?

It seems so counterintuitive that you have to wonder why he looks at the same job numbers as we all do and can’t recognize that job creation starts with giving small businesses every advantage to succeed.

Chris Holman, chairman of the Washington-based National Small Business Association, recently was quoted as saying: “The politicians all say small business is the economic lifeblood of our country, and then they go and vote against small business.”

Small businesses are already beset by rising taxes, burdened by unreasonable regulations and facing untenable healthcare costs.

The president vowed to “help small, main street banks provide more loans to help small businesses.” But as Scott Shane, writing for Bloomberg BusinessWeek, recently wrote: “Bank credit to small business has dropped dramatically since the president took over. From 2008 through 2011, the last year that data are available, the Small Business Administration shows that the number of business loans of less than $1 million — a commonly used measure of small business credit — fell 22 percent and the value of the loans declined 18 percent in inflation-adjusted terms.”

Taking a page from President Bill Clinton’s Democratic National Convention speech: it’s about “arithmetic.” If exports support 9.7 million jobs, and if 97 percent of all exporters are small businesses, then wouldn’t it make sense for small businesses to get 100 percent of the Obama administration’s attention?

We need to get small business working and hiring again. Having an administration that understands exports would be a huge step forward. That’s how this country grew, and that’s how this country will get out of its current economic mess.

What’s good for small business is good for America.

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We need to get small business working and hiring again. Having an administration that understands exports would be a huge step forward. That’s how this country grew, and that’s how this country will get out of its current economic mess.
Thursday, 20 September 2012 07:40 AM
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