Due to the complexity of some of the parameters of this economic design, it is necessary for certain assumptions to be made that are no longer considered "popular" in world economic affairs. Therefore, it needs to be understood that this solution benefits mainly the United States of America and simply appeases outside countries only in the manner in which we hold liabilities to those nations. This report is built on a trusted economic model of business that has worked since the beginning of time and has only failed when it is interfered with by outside and/or internal intervention.

     In order to rebuild a nation's economic engine there are several factors that have to be evaluated:

• What is the goal of the economic base?
• At what level is regulation involved?
• What safe guards are expected to prevent Monopoly situations?
• What are the current liabilities of the current economy?
• What "business" assets does the nation have to work with.
• Evaluate the priorities of what is worth paying more for, and what needs terminated as a expense.
• Find adequate time lines in which to model the economic engine, in so doing causing the most overall cost effective loss vs. gain engine.

     Variables that are used to create the model.

• Assets

1. Country has a strong history of innovation and entrepreneurs.
2. Large GNP (Gross National Product) (over 14 Trillion a year and a 1/3 of the worlds income by 2009 numbers)
3. Heavy infrastructure.
4. Over 3,700,000 square miles of real estate.
5. Large amounts of Natural resources.

• Liabilities

1. Large National debt.
2. Large dependencies on foreign oil.
3. Massive direct and indirect liabilities to China and other Asian Nations.
4. Heavy restrictive regulation and taxation.

     In this section the primary goal is to restore (or increase) employment to a state that will not only be a solution to the current employment problem, but also use it to solve other problems in the "crisis web" that the United States is currently is snagged in. In short, our goal is to produce not only jobs, but jobs that meet the needs of the "demand for jobs".  Though it may seem those two are the same thing said two different ways, actually it is not. Current PC policies dictate that most (if not all) new jobs need to be environmentally friendly or higher educational skilled jobs. Realistically that "opinion" is not a sound economic strategy for several reasons. It assumes several things that in itself are a matter of opinion. Some of which are:

1. All or most people are willing and/or able to learn higher education to perform such jobs.
2. All or most people are willing and/or able to pay for higher education to perform such jobs.
3. Jobs which are environmentally based are economically sound and profitable.
4. Jobs created for the "foundation of the politically correct ideologies" are in fact long term jobs.  Not jobs that will be nothing more than a "statistically challenged employment number" in which one person is counted as a newly hired employee for a job that lasts only six months just to be counted again as an unemployment statistic.

     If you do any research into the employment problem in the United States, you will notice several trends. Many of which tear into other topics in this report. At this point we are focusing on the basic "employer demand". In a capitalist society, we will use the supply and demand model to force a solution with little to no risk to insure success.

     Due to the over-whelming amount of historical data confirming that State employment (or government jobs) very rarely fix economic problems, we will model this solution as much as possible without using government intervention and regulation. In this case, the exception to that rule will be the implementation of a import tax and the use of it. We will also focus between a "service based job" and a "manufacturing based job" as separate entities. It is however understood that they are both linked in many ways. Understanding it is difficult to put real numbers on the quantities of "one kind of job" that can be built from "another" kind of job". So with the interest of this report we will focus mostly on manufacturing and count any and all service based jobs as a result of manufacturing as a bonus and they will be mentioned very little.

Where we are:

This report will explain the idea first, the structure second, and the details of both last. Though the concept is quite simple, there are many variables that must be taken into account even if "common sense" dictates it as a given.

Currently, data pertaining to the numbers of lost jobs to oversea sources is a bit of a mystery. The reason for this is because this particular data is not collected by any known source. And even sources which claim to give statistics are "best guesses" based on individual company records and then multiplied by X to give a "feel" for the trend. As difficult as it is to believe, this is a fact.

     It is "best guessed" by the "economic policy institute" that since 1998 59% of manufacturing jobs have been lost due to the explosion in the US manufacturing trade deficit over the period recorded. The "Forrester Research, Inc" predicts US employers will move 3.4 million white collar jobs and $136 billion in wages overseas by 2015. Any amount of research done in this area will reveal a massive amount of data. This being the case, it is a fair assumption for this report's purposes to state that the United States of America is loosing jobs over seas. Though there are many who believe there are answers other than bringing those jobs back, for the purpose of this report we are more interested in solid business strategies that will insure solutions without new, untested, opinionated ideas.

Solutions:

     In a supply vs. demand setting, (free market) we need to set our goals to cause a demand for manufacturing to return to the US. Based on a typical company (sale price - cost= (Profit) model), the biggest hindrance is that it is more economical for a company to function over seas. In a free market, this can only be rerouted by causing foreign cost to rise massively, but responsibly. This of course is nothing new and is called an import tax. According to our figures the US is in massive deficit on many fronts at this time. For this reason it is our belief that there is a need for a radical movement in this area, and this movement is essential.

     For reasons we have been unable to uncover, current legislation policies such as NAFTA are hindering US economics with little to no benefit for the US. With this information the first step would be to repeal NAFTA and any other import legislations that may hinder "new" legislations that will be needed to restore the US manufacturing business model.

• Repeal NAFTA

     To increase a demand for manufacturing within the USA, we need to cause the price of imports to increase responsibly, but quickly. To implement this, the value of a good being imported would have to be tracked. With this information an import tax would be imposed. Each year the import tax would be increased to cause a "trend" in which new markets would become open to invest in.

      EXAMPLE:

     Lets say a "Widget" which retails for $10 at a store today that came from China costs $8 for China to make. So the Chinese company made $2 profit. This profit at such a low price is due to the extremely low labor cost over seas toppled with the very lean regulation of that country's manufacture standards. The same "Widget" would cost a USA-based company $11.50 to make and thus impossible to compete with the Chinese  market.

      To start the process to solve this problem an import tax would be exercised and increased yearly. So the first year the wholesale ($8 valued) "Widget" is taxed at the border at 10% the first year.  So the Chinese item now costs the consumer $10.80. (($8*10%=.80)+($2 normal profit)=$10.80)  Cost increase to the over seas supplier is passed on to the end user, (Customer)

     The next year, import tax is increased to 20%. This causes the price of the "Widget" to be $11.60 for the end user. (Which happens to be over the cost it would take for a USA company mentioned above to make the item.) Third year tax is increased to 30% and then 40% and so on. At 40% the price of the Chinese "Widget" would be $13.20 for the consumer. At this point it is economically sound for a USA company to produce the "Widget" at a cost of $11.50 to make and sell the item for $13.20 and make almost the same profit as the Chinese company makes.

     At 50% it would be more viable to produce the "Widgets" in the USA rather than China, and the cost of the USA item could actually be less expensive.

 - - - - - - - -

     This would start many chain reactions and solutions in many different areas. For one, entrepreneurs in the US will see this trend long before it's even felt by the US consumer. Each one of them will want to be the first to begin producing something that they know within 5 years they will be able to out sell any over-seas produced item. This too will open an absolutely huge amount of other markets. Some of which are:

1. Massive increase for new factory space. (Renting empty buildings, building new factories, etc.) Effectively restoring many real estate issues that have growing over the years. (Discussed in another section of this report)
2. Currently, 90% of all items in a typical house hold are manufactured in a foreign nation. This means the number of new companies would be massive. All of these companies would need employees. This would single-handedly transform a Nations economy.
3. The number of service-based industries to take care of the factories, factory workers, etc, would increase at an equal or greater volume.
4. Massive increase in Federal tax revenue due to the import tax. (Discussed more below)
5. With the massive number of new jobs that would be created by each company, there would be a shortage of workers in a very short time and a serious shortage of skilled labor for these same companies. This in effect will cause a higher demand for those jobs and each company will increase pay to get the workers they need. End result will be incredible pay increases for workers and serious pay increases for skilled labor workers.

     As with most solutions that impose taxes, there are some negative aspects to look at. Namely in this case, consumer cost. There is no denying that overall consumer cost will go up. After looking at this fact and comparing it with the likely outcome of doing any other solution on the table (including nothing), this approach would be much more "economically sound" in the mid and long term.

     This process would also restore a foundation of our production capabilities and innovations. From our calculations there will be such an increase for employees that there could be a shortage of workforce. Which when plugged into the supply and demand formula, would cause employers who want the best workers to once again offer higher paying wages for those capable of performing those jobs.

     Another problem that will have to be dealt with is our dealings with foreign countries and some of the agreements with them. Namely China. Currently China is keeping our economy afloat by buying US bonds and/or notes. From our research, the dynamics of this seem to be changing quickly and it seems very likely that at any time China could cease doing so. This would cause another melt down which we must try to prevent at any cost.

     Notably, since we are taking a percentage of their manufacturing away from them, they are going to notice. However at China's current growth rate within their own country, it is possible with their population and the fact they are just starting their own industrial revolution, that the United States impact within 10 years may be nothing more than a mosquito bite. This leads us to the next step of this report which covers the revenue of the new import tax.

The Revenue:

     Trying to find actual numbers on the amounts that are imported every year into this country is a daunting task. But the most widely used numbers are almost $300 billion a year in imports. So the first year revenue at 10% would be 30 billion dollars in import tax revenue. And at 40% it would be 120 billion dollars. From our calculations, it would be best to break this revenue up in to 3 parts.

      (50%) of the revenue would go to paying off the National debt. That money combined with the huge influx of other taxes that will come from increased work force and infrastructure such as payroll/income tax, real estate taxes, sales taxes, capital gains taxes, and everything in between. If all the calculations work out correctly, the over all government revenue could rise between 25-50%. It should be noted that we directly owe China almost a trillion dollars just in loans.

     (25%) of the revenue should be used to finance a government programs to supply no/low interest loans for startup companies to produce much needed products. It also should be noted that other incentives could be used to get business started quickly such as, "first company rights". An example would be if 100% of the "TV's" in the US are imports because the US simply does not produce any of them anymore, then the first company that applies for the tax rights of a product not yet produced would get a 5 year 100% free tax credit for that company. This would help stimulate the needed growth.

     (25%) back to China. In order for this restoration of manufacturing there is going to be some kind of compensation back to China (namely). The reason for this is (as the old saying goes) you don't bite the hand that feeds you. We will try not to get into too many details in this report of the (and because of) overwhelming complexity of the trade agreement the USA is currently involved in, most notably, the G20 subjects. It must be stated again that the purpose of this report is to restore the economy of the USA, not the world. From our calculations, there is no logical way to increase overall economic growth in the USA at a noticeable level while trying to "haul" the rest of the world up with us. That said, there still is the matter of importing the productive jobs back to the USA instead of just the products while at the same time, insuring the tranquility of our relationship with China.

      This last 25%  which is to go back to China can go many ways. To be upfront and honest, it is the most complex and sensitive aspect of this report. This is contributed to many variables that over step the bounds of the purpose of this report. However, a suggestion that could be made to work would be:

• Use the Tax percentage to purchase US grown food for the export to the country of China to help the common welfare of that country. This would serve benefits.

1. It would show "in good faith" our intensions are to become more self-sufficient and stimulate our economy.
2. Over some time it would have some impact on China in which they may become a bit more dependant on our food reserves and thus (over time) may become a large export customer of the US.

     Let it be noted that it is very difficult to report on actions of one topical subject in regards of anything politically-based since there is clearly a relationship between one set of political policies and a completely separate topic of politically-based policies. This is even more so when the bottom line is counted as currency. There are also many exceptions that have to be made to this model, such as petroleum products (crude oil), food (coffee,etc),  for reasons that are more common sense and better explained in a different section of this report.

Written by Curt Mechling (1997)

Updated - 2009