The Dollar Falls

I had a conversation with my friend, Lee Presser, on the phone today. We were discussing the recent fall of the dollar. I told him that I felt the decline was not as much to worry about as might be thought. The dollar's decline is generally accompanied by a commensurate increase in exports that sooner or later offsets the adverse effects. I am of the opinion that there is a bigger economic problem facing this country...

The problem: globalization and free markets are draining middle-class jobs out of this country. Of course, this has been offset by the availability of less expensive goods flooding into the country.  Until about two weeks ago, I have been an inveterate free-trader. Those of you who know me, know that my conservatism borders on libertarianism. However, it has suddenly struck me that the trends of the last couple years are adverse to the American lifestyle and American culture.

I had always thought that globalization would have the effect of lifting up the nations which were most exposed to it. As I told Lee, it does indeed have a lifting effect for nations that began on the bottom, but it has also produced a drag in the most advanced countries, at least until the world becomes generally equalized. Perhaps we should have been more protective of our preferred position. I hate to admit it, but Pat Buchanan was right.

Traditionally, the United States has had tariffs to protect its industries. The major source of federal revenue, for the first hundred years, was money collected from imports. The mills and factories of New England that participated in the industrial revolution were protected by the tariff barrier from competition from the powerhouses of Old England. Perhaps we ought to move back in that direction. It would not be easy considering the trade agreements we have nurtured in the last twenty years. But consider - the continued expansion of these agreements could, if probably only temporarily, drag the U.S. closer to a third world economy with greater divergence between the rich and poor. I have nothing against the rich or the poor, but it has always been the middle class that has been the backbone of Anglo or American power. It would be foolish to give it all away.   

A new system of tariffs, if properly done, could protect manufacturing and spur the growth of new industries and also ultimately be a boon to the federal treasury.