Don’t Let this Crisis Go to Waste

May 21, 2009 by  
Filed under Economics

economic_crisisWe have heard several prominent Democrats say over the past year that a good economic crisis should not be wasted.  To them, a crisis brings fear and distraction to the people which can be exploited. They do this by introducing hugely expensive new programs and boldly extending regulatory authority, all in the name of “reform” The Democrats have been true to their word thus far, exploiting away.

Mr. ToughMoneyLove has another idea for exploiting this economic crisis. It involves our trading partners around the world. These are the many countries with economies that depend greatly on Americans buying stuff from foreign suppliers. Stuff, by the way, that we are not buying so much of right now.

We know who those countries are. In this report from the Wall Street Journal, we learn that although our economy contracted at a 6.3% annual rate in the first quarter of 2009, other countries did much worse in annualized GDP declines. Some examples:

  • Mexico:    -21.5%
  • Japan:       -15.2%
  • Germany: -14.4%

Many economists attribute these disparate numbers to the greater dependence of those economies on our spending. Every dollar we don’t spend hurts them more than it hurts us.

Here is my reaction to this observation. Why don’t we use this harsh reality of dependence on our spending power to extract economic concessions from these countries on a going forward basis? Isn’t that how the smart people use their power? The Democrats are in power, they have a crisis to exploit, and they are doing a bang-up job of using that power.

I say go for it on an international scale. Let’s do the same thing to our trading partners who so desperately need us to start spending and buying their stuff again.

There are limits on what we can do directly, because of  GATT (General Agreement on Tariffs and Trade) and NAFTA (North American Free Trade Agreement). But there are plenty of other ways to exploit this crisis and extract concessions from these countries. I can make a short wish list in a few seconds:

  • Mexico – Why don’t you build our much-needed border fence.
  • Germany – We think you should open more auto plants in the U.S.
  • Japan – Ditto
  • Everyone – We could use some more help with those little problems in Afghanistan, Iran, and North Korea.

Exactly how would we apply our leverage without violating trade agreements? I will leave that up to the expert power-wielders.  But as one example, I am confident our tax system could be subtly manipulated in ways to favor some imported goods over others. We would prime the pump by getting some Administration officials or Congressional leaders to openly discuss possible changes to the tax code.

Or, our stimulus money (which is largely unspent to date) could be directed at projects that favor domestic production of stuff we import in mass quantities from the countries that are hurting the most.

Generally, we threaten to hit them while they are down or maybe we just won’t let them get back up.

What do you think? Do you believe in exploiting an economic crisis?

Image credit: dipfan

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8 Responses to “Don’t Let this Crisis Go to Waste”
  1. Ian says:

    Absolutely…dead on! We need to exploit the advantage. Certainly our “trading partners” would and do when the shoe is on the other foot.

  2. There was a quote in a movie that I can’t remember that applies to this situation: “In chaos, there is profit.” I think Tony Curtis said it. Now that’s going to drive me crazy…

  3. Miranda says:

    I think you make a very good point. We still do have some leverage on a global scale. And we should use it.

  4. MasterPo says:

    I guess you haven’t been listening to our Messiah. For too long America has gotten too use to the idea of being the big kid on the block, pushing our ideas and values on others. How dare we use an economic crisis to further expand our own agenda. We are just one of many other great(er) nations on Earth.


  5. TStrump says:

    We need to be careful when using our leverage too much.
    People get really upset if they feel they’re being taken advantage of.
    Upset people do things like terrorist plots … or just trying to get even somehow.

  6. MasterPo says:

    TStrump – I agree. Let’s be nice to everyone. Turn the other cheek. That’s how you defeat killers and keep people safe. Once they see we aren’t a threat they will leave us alone. Great strategy.

  7. TStrump says:

    Po – No saying we should be pushovers … just saying we need to proceed in an deft and intelligent fashion to get the most concessions and make the most money in the long term.
    ‘Keep your friends close, but your enemies closer …’, or something like that.

  8. Jonathan says:

    How about excluding the UK from the “everyone” in your last bullet. Not sure that exploiting is the right way to go but you certainly don’t want other countries taking advantage.

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