Why jobs keep vanishing

Washington is obsessed with the budget deficit. It's all that lawmakers can talk about. The hysteria is such that they can't even agree on raising the ceiling on the national debt. As for how much to cut out of the budget, some would settle on reduced spending in the billions. Others want much more. As one headline summed it up: "[House Speaker John] Boehner demands 'trillions' in spending cuts in exchange for lifting debt ceiling."

There's only one problem: Congress is wrought up over the wrong deficit. The real deficit issue that has been out of control for 35 years is the trade deficit. That's the one that has decimated the American workforce, blocked the creation of millions of jobs, created millions more jobs for people in other countries, triggered pay cuts for millions of workers who still have jobs in the United States, and generally lowered the standard of living for many at the bottom and in the middle of the economic pile. Those at the top have flourished quite nicely under this policy.

To be sure, the trade deficit in goods is inflated in part because the United States refuses to wean itself off imported oil. But the deficit goes well beyond oil. America's largest goods deficit is with China, a country that sells no oil.

Apologists have argued that the policy enables consumers to buy goods at a much lower price than if they had been manufactured in America. But what they neglect to say, as we observed two decades ago when we first wrote America: What Went Wrong, our Inquirer series and later a book, was that a country built on the principle that all that matters is the lowest possible price will look very different from a country that ensures all workers receive a living wage. To achieve the lowest prices, Democrats and Republicans threw open the doors to manufactured goods from countries whose governments protected their workforces, subsidized their industries, and blocked or restricted imports from the United States. As a result, the playing field was never level. It became so distorted that American taxpayers actually subsidized the creation of jobs in other countries.

This mistake will be terminal for working Americans who have been deceived by lawmakers - Republicans and Democrats - for decades with false promises to correct a trade imbalance that has been catastrophic to their economic well-being.

To appreciate the depth and extent of that deceit, let's go back to the early 1970s.