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Rescuing our Grandchildren's Future

By PHS Staff
Printed in Practical Homeschooling #82, 2008.

Why we have to worry about whether our kids will have a job, and what to do about it.
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Will our children even have jobs once they graduate from high school or college? And if they do, will those jobs last long enough for them to raise a family?

Or does the future lead to our American grandchildren growing up in Third World conditions, in a country whose financial lifeblood has literally been shipped overseas?

A three-generation family of economists think they have found the answer to America's declining economy. The grandfather, Dr. Raymond Richman, is Professor Emeritus of Public and International Affairs at the University of Pittsburgh. He earned his Doctorate in Economics under Milton Friedman, who has widely been acknowledged as the top economist of the 20th century. The father, Dr. Howard Richman, has been prominent in homeschool circles for years, as the founder of Pennsylvania Homeschoolers, a statewide support organization now in its 26th year. His son, Dr. Jesse Richman, a homeschool graduate with a Doctorate in Political Economy from Carnegie-Mellon is currently an assistant professor of political science at Old Dominion University.

We at PHS first became aware of their new book, Trading Away Our Future, when a piece about it showed up as the top story of the day on WorldNetDaily.com. Intrigued by both the book's premise and its unusually homeschool-friendly team of authors, we tracked Howard Richman down. He graciously agreed to an interview, so here we go!

Howard Richman Speaks

PHS: How did all three of you decide to collaborate on this book?

HOWARD: I started writing a book with my father, trying to bring out all his best ideas from his years and years of teaching and doing economics research. Most of his ideas were about taxes. Then he had this one crazy idea about the trade deficit. I thought, "This idea is way out and economists will never go for it." The same month he got that idea published for the first time, in the Pittsburgh Tribune Review, Warren Buffet, the richest man in America, said somewhat the same thing in Fortune magazine. It was a great idea for how to balance trade. Warren Buffet called it "import certificates." You tie how much you're going to import from a country to how much they're going to import from you. It basically says that trade should be reciprocal.

It's important to understand why the United States has these long-term economic problems. A lot of people talk as if the main problem is unemployment, but unemployment isn't really very high. The main problem is that we aren't getting the investment we need for our workers to be more productive. The trade deficit, and the manipulation of it by our trade partners, especially those in Asia, discourages American companies from investing in this country.

Right now countries in Asia are ensuring that trade will be a one-way street. They are developing their countries by stealing our industries. They do this by keeping our dollar artificially high compared to their currency and by unfair tariffs on imported American goods. Many countries also allow companies based in their countries to get a "rebate" on the Value-Added Tax for exports, while American companies that want to import to them have to pay the full VAT tax.

The bottom line is that an artificially strong dollar is squeezing businesses and jobs out of America. And if this continues, we'll not only lose our factories and equipment, but the knowledge of how to build and operate them, and the constant improvements in manufacturing techniques that we get from "learning by doing."

That idea became so important to American economy that we took the first half of our book to focus on the problems with trade and how to fix them. We give equal treatment to Warren Buffet's solution and our solution, which are very similar. They both require that trade not be a one-way street.

Warren Buffet says, and we agree with him, that we're moving towards a sharecropper society, where Americans don't own anything we work for, and the owners are mostly foreign governments.

The second half of the book is about how to fix the broken tax system. Each chapter focuses on a different tax. The two problems are related and I think we tie them together well. If you're going to balance trade, you need more savings by Americans, and you can't afford to have a tax system that discourages savings, as our current tax system does.

Part Three begins with a chapter that tells what you can do, as much as possible, to insulate yourself from these problems. Then we lay out a program for America to solve these problems.

If you look at all the trade entanglements that aren't working for America - the World Trade Organization, the International Monetary Fund - there are ways they COULD be used by America to bring about trade balance, but our elites just haven't done so.

PHS: How is what you say in your book different from other books on the trade deficit and the future of America?

HOWARD: We actually correct about a half-dozen economics errors in our book. For example, every economics textbook teaches something called "comparative advantage." The idea is that two people or countries never trade unless the outcome is to both of their advantages. However, what they don't point out is that this only works if the balance of trade is neutral to begin with. What the Asian countries are doing is that they are trading for our goods with IOU's. We don't have to pay anything! They build industry, while we don't, and the result is that they get richer in the long run and we get impoverished.

PHS: Do you have to have economics training to understand Trading Away Our Future?

HOWARD: You don't need any economics background to read the book, but you'll receive a bit of an economics education just by reading it.

PHS: Which college majors will lead to long-term viable careers in the future? That's a major concern for homeschool families.

HOWARD: You have to understand what's going on at an overall level of the society. The trend since 1984, when the trade deficit started taking off, has been for people in manufacturing to have their wages go up only slightly more than inflation. During this time, people in financial services had incomes that went up like mad. But that trend is over, unless somehow we can convince Americans to borrow even higher percentages of their income than they are now. That's the current strategy in Washington, and it's a pretty lousy one.

I was talking to a mother last spring whose son has been very successful as an engineer with a major American company - I think it was Apple Computer. He decided he wanted to get out of manufacturing and go into financial areas. I said, "You'd better warn your son that part of our economy is about to take a huge hit." Ever since then, that area of our economy has been laying off people in massive numbers. Here he is, working on his job switch, and I told him, "Don't worry, in a few years manufacturing will come back in America, and then you'll be in demand - but as an engineer."

Either manufacturing is going to come back in a big way in America, or nothing we do will matter.

If capital per worker - the tools workers have - don't get better, then our economy just doesn't grow. So we'll be about the same level of economy at the end of this century as we are now, if we don't address our problems.

Go ahead and pursue a degree in engineering, if it interests you. Just make sure to learn Chinese at the same time. Engineering is going to come back in America, because Chinese companies and other foreign companies will be building factories in America, to take advantage of our cheap labor.

Where to Find It

Trading Away Our Future is available at an introductory price of $9 plus $3.95 shipping from pahomeschoolers.com. Bulk discounts are available. We at PHS highly recommend this book.

For more information, see Howard's blog at idealtaxes.com.

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