America Is Losing Jobs by Ignoring Its Best Trading Partners
By Jim Clifton.
Jim Clifton is Chairman and CEO of Gallup. He is author of The Coming Jobs War (Gallup Press, 2011).
There was a time when the news that GDP declined last quarter at an annualized rate of 0.1% — as the Department of Commerce recently reported — would’ve set off alarms all over the media. But the silence was deafening.
I guess the mainstream media and leadership in Washington — from both sides of the aisle — are just getting used to a stagnant economy. GDP growth is slowly but surely leaving the conversation.
This is disastrous, because a no-growth economy means no new jobs, no economic future, and the country going broke.
As America’s economy continues to fail — with political leaders and media apparently failing to notice or care — my assumption has been that my children should learn Mandarin, as their bosses will want them to speak their language. It’s a fair bet, too, given that China is buying more and more businesses in the United States, with their GDP growing at about 8% annually it will soon overtake America’s, which is now growing at a blended 1%. That pathetic figure isn’t enough to keep up with inflation, population growth, or even the most modest consumer price index.
It’s clear to me that the only way for America to get back into the game is simply to increase exports. The country has to export or we’re screwed. We also need to ramp up new business startups immediately. Right now, startups have fallen below 400,000 per year, in my estimate, and the country needs a bare minimum of 1 million new startups annually to keep the economy running.
But before the next generation runs out and learns Mandarin, they should consider this: America’s total exports to China right now are running at about $100 billion annually, while our annual exports to Latin American countries are a staggering $350 billion. That’s right, U.S. exports to Latin America are more than three times what we export to a country with a significantly larger population than all of Latin America combined.
My point is simple, but a lot of people seem to be missing this: America’s trade partnership with Latin America is significantly more valuable than our trade partnership with China. Specifically, the trade partnership with Latin American countries probably creates more than three times as many jobs. And of the over $350 billion dollars in trade that the U.S. does with Latin America, more than $200 billion comes from Mexico alone.
Clearly, Latin America generally, and Mexico in particular, are very good friends of the United States. That friendship creates so many jobs and so much economic energy, and yet our leaders rarely seem to mention Latin America, let alone Mexico. When Mexico’s President Enrique Peña Nieto next visits Washington or New York, he should be greeted with a huge ticker tape parade, rather than the mere 15 minutes or so of chitchat that the White House had with him when he visited last November.
The reason he should get that parade is because, through U.S. exports, there are more American jobs currently tied to Mexico, and Latin America more generally, than to China, Russia, and the Middle East combined. It seems that nobody knows this. Yet this information is vital, because America’s biggest problem right now is still job creation — with unemployment stuck at around 8%, underemployment at 17% — and no economic growth.
America’s biggest trading partners create millions of jobs in the U.S., while our relatively tiny trading partners like Russia, the Middle East, and African nations create few. We need to devote more time and effort to our best customers, and less to our very small ones. When, and if, the country focuses even more intensely on Latin America generally, and Mexico specifically, I believe it will create millions of new jobs.
Look at it this way: If you and I spent all our time with our smallest, worst customers and barely spoke with nor celebrated our biggest customers — the ones that fund us — it would be a very bad way to run a company. It is a bad way to run a country, too — especially when the economy is failing.
I think I am going to have my kids learn Spanish first — they may not need Mandarin, let alone Russian or Arabic, after all.