Who do we shoot?

In a scene from the John Ford adaptation of the John Steinbeck classic, Grapes of Wrath, the farmer Muley was evicted by an agent of a shadowy organization from the farm that his family had worked for three generations.

MULEY: You mean get off my own land?
THE MAN: Now don’t go blaming me. It ain’t my fault.
MULEY’S SON: Whose fault is it?
THE MAN: You know who owns the land — the Shawnee Land and Cattle Company.
MULEY: Who’s the Shawnee Land and Cattle Comp’ny?
THE MAN: It ain’t nobody. It’s a company.
SON: They got a pres’dent, ain’t they? They got somebody that knows what a shotgun’s for, ain’t they?
THE MAN: But it ain’t his fault, because the bank tells him what to do.
SON: All right. Where’s the bank?
THE MAN: Tulsa. But what’s the use of picking on him? He ain’t anything but the manager, and half crazy hisself, trying to keep up with his orders from the east!
MULEY: (bewildered) Then who do we shoot?

In the recent elections, the American electorate was farmer Muley. But it was a different farmer Muley, one who was infinitely more determined to shoot. That electorate rampaged on the streets looking for people to shoot, people deemed responsible for their miseries. Except that now in 2010, those going postal pick off their managers.

The American people knew exactly who to shoot. It was the managers. And that meant the Democrats.

One by one, Democratic congressmen and women were picked off, downed by marauding mobs brandishing hunting rifles and shooting wildly into the air just to make sure their weapons were loaded and firing.

It was a massacre. Some of the best and brightest went down, along with the new ones who entered Congress only two years ago, men and women who clearly had nothing to do with the Great Recession that started in 2007, when the absentee President, George Bush, Jr., was still President.

The people are still jobless, their homes, their farms, their businesses have not been returned to them, but at least the American Muleys had found their revenge.

Now the Republicans are in charge of the House of Representatives, and they have two years to prove that they can do a better job than the Democrats in the area of job creation. The people want jobs, jobs, jobs. They are not interested in the ideological warfare that is going on between progressives and conservatives, between liberals and libertarians. They just want to work again. Is that too much to ask?

A lot of Americans - especially those 50 or over - who lost their jobs in the Great Recession just past, a recession that is officially over but is for most people still going strong, may never work again. Unless some drastic, even draconian steps are taken by the U.S. government. And what steps may those be?

Oh, please. Don't give me this tax cuts for the rich thing that Republicans Boehner and McConnell are trying to sell to the American people like snake oil. Reagan and Bush, Jr. slashed taxes for Americans in dramatic fashion and few jobs were created. Bush, Sr. and Clinton raised taxes and the economy boomed, with 22 million jobs created in the 1990s during the Clinton presidency. Were the jobs created because of the tax increases? Of course not. But this proves that tax cuts do not create jobs, while tax increases do not lead to job losses.

What actually created jobs in the 1990s? It was American ingenuity and entrepreneurship. There were so many start-ups that were created by the high-technology boom during the Clinton years. Those start-ups were formed in kitchens and garages, employing one person plus the partners. They quickly grew and soon they were employing hundreds and relocating to Silicon Valley, Manhattan, Northern Virginia, Boston and other centers of high-technology. A lot of Americans were known to have day jobs and night jobs, some of them my nurse clients who worked in hospitals for three days and in nursing homes the rest of the week. Money was easy during the Clinton years.

America must start making things again in this country. All these American companies that pay their CEOs and top managers salaries and bonuses in the tens of millions while laying off American workers and transferring manufacturing and back-office operations to other countries, must be discouraged from doing so through punitive taxes. These companies must be encouraged to relocate plants and operations back in the U.S. or forced to pay punitive taxes. What? These companies will simply relocate to other countries to escape U.S. taxes? The U.S. Congress will know exactly what to do with such companies.

The challenge for these companies that relocate manufacturing plants in the U.S. is to remain competitive in the global markets, since American-made products will tend to be more expensive than goods manufactured in, say, China. How will American business accomplish this? By increasing productivity. We can put a man on the moon, we can explore the universe with our probes. We should be able to increase productivity enough to compete with any country.

The process will take time, over at least a ten-year period. In the meantime, the U.S. must impose tariffs on goods coming from countries that have a lopsided balance of trade with the U.S. If a country exports to the U.S. lopsidedly more than it imports from us, there will be tariffs imposed on their products that are exported to the U.S. We want trading partners, but we want partners who will buy from us, not just sell to us.

Think China. Of course this legislation would be aimed at China. Serves them right. Many economists, notably Nobel prize winner Paul Krugman, believe that China manipulates its currency to make the dollar more expensive than it should be, rendering American goods uncompetitive in the Chinese market. The tariffs against Chinese products will level the playing field and encourage American manufacturers to relocate back to the U.S. Chinese companies may also be encouraged to manufacture products intended for the U.S. market to be manufactured on our shores.

There is a widely held doomsday scenario that features a China retaliating and taking the world to the brink of a trade war between the world's biggest trading "partners." Fine. Let there be a declared trade war. There is currently an undeclared trade war being waged by China against the U.S. and other countries such as Japan and Brazil through its currency manipulations. In a declared trade war the American people will be on the same page, and on the same side.

In a trade war, the American market will be virtually closed to Chinese goods but will be open to Canadian, Mexican, European, Australian and Asian manufacturers. Most countries will be on notice that if they exploit the American market through predatory practices, they too will suffer China's fate. China, in such a hypothetical, will be forced to sell goods normally sold to the U.S. market in other countries, but this avenue appears closed to China because China has also manipulated its currency vis-a-vis other currencies. The result is that non-U.S. markets will not absorb the excess Chinese capacities resulting from the closure of the U.S. market.

In fact, other countries such as Japan, Brazil and Europe would likely be emboldened to confront the Chinese and join the U.S.-initiated trade war.

It is an Armageddon that China would rather not face. China will try to avoid this Armageddon from ever starting. However, if the world moves inexorably towards a trade war, the most likely scenario that will unfold is that China will dramatically ease its controls on its currency and allow it (yuan) to float to its true value vis-a-vis world currencies such as the dollar and the yen. The rise in value of the yuan, will of course happen gradually and the U.S. must not consider this as a cure-all.

The U.S. must insist that the multinationals that have access to the world's biggest and most reliable market - the American consumer - must go back to manufacturing in the U.S. once again. At minimum, the U.S. government must insist that the multinationals manufacture products intended for the U.S. market on U.S. territory.

Americans must have jobs again. The continued high unemployment in the U.S. will eventually result in the collapse of the American consumer market, which will not be good for China, Japan, India, Europe and all exporters to the U.S.

Besides, continued high unemployment will further stoke the fires of anger and angst in the U.S. and marauding mobs will no longer be just active during the election season but will be active year-round, year in and year out. Institutions will collapse and nihilists and anarchists will rule the streets, the airwaves and the academic communities.

American manufacturing must be revived, and quick.

Meanwhile, as China sees the error in its ways, the rest of the world will probably look upon the U.S. with admiration and gratitude because most of China's trading partners have suffered the same fate as the U.S. Especially hit hard, in fact, are some of the European countries. China's march towards world dominance will be slowed and to an extent reversed.

China will someday be the biggest and most important economy in the world. Only a fool would deny its inevitability. But it must be slowed to allow other countries, especially the U.S., to make structural changes that will ensure the viability of their consumer markets, which is important for an orderly globalization of the world's economies.

A word on the Chinese threat to stop buying U.S. treasuries. The additional revenues generated by our resurgent manufacturing will expand the U.S. economy, which in turn will be able to absorb the shock of a closed Chinese market for our treasuries. If that proves insufficient, we can print more money, causing a measured devaluation of the dollar, making us more competitive. The Fed has in fact done this recently, when it bought $600 billion worth of U.S. treasuries. U.S. short-term interest rates would go down further, causing an uptick in economic activity. The resulting inflation will also cause an increase in the value of U.S. assets, especially houses, rescuing homeowners from their upside-down (houses worth less than the mortgages on them) financial condition.

Consumer items will cost more, but the unemployment rate will drop dramatically and people will actually have money to buy the more expensive goods. The President and other political leaders will have to be on TV almost daily, explaining why higher prices are actually good for the American worker. Higher prices will mean lower unemployment in the U.S. in the long-run and a less reliance on a predatory Chinese economy in the short-run.

When normal trade resumes with China, the U.S. trade deficit with that country will be dramatically down. U.S. manufacturing will be healthy and strong and the relationship between China and the U.S. will be mutually beneficial, not one-way as it decidedly is now.

A new high-tech industry in the field of alternative energy, a long-range program of upgrading U.S. infrastructure to the 21st century standards being set by China and other modern countries will parallel efforts to bring back lost manufacturing industries to the U.S. Tax revenues will increase and Clinton-style surpluses may soon appear on the horizon, finally breaking the back of the monster that dumps mountains of debt on American taxpayers.

You wonder how the world will change for our children and their children? The answer lies in the political will of our leaders. If they act decisively and smartly, there is no reason why our children and their children must live in a humbled, timorous and self-doubting America.

There is no reason why future generations must adjust to a standard of living that is down significantly from ours.

(Pictures used are from Glorious Opposition and Media Matters for America blogs.)