By scrapping its currency exchange rate handicap, the United States can bring more manufacturing jobs back home and regain its economic edge over China, a former planner for General Motors said Monday.
"Exchange rates mean a lot. It's not about wages," Thomas Crumm told Findlay Rotary Club. "It's about exchange rates."
If the U.S. does not improve exchange rates, it will collapse economically, Crumm said. The slide already is on, he said. One only has to look at history.
"Holland went through it, Spain went through it. England went through it in the last 400 years. We're going through it," he said. "When you begin to become a dominant world power, you can negotiate for imported goods ... you begin to leverage foreign goods and bring them into your own country. But you don't realize that you drain the coffers of wealth out of your own nation when you do it, and you end up in an economic collapse. We're struggling with that right now."
Crumm said the problem involves a nation's leaders focusing on finance, insurance and real estate, and neglecting a fourth, critical part of the economy.
"Your intellect, your energy, your education system goes toward those three segments of the economy," he said. "You need the fourth, you need industry to make the economy stable."
The problem started with a worthy cause. After World War II, the U.S. and other Allied nations wanted to avoid a third world war by helping Japan and China rebuild, Crumm said. So they fixed exchange rates to encourage the Allies to buy industrial goods from Japan and China. It worked.
In 1970 and 1971, President Richard Nixon offered more favorable currency rates to China to lure it further into the world economy and away from alliance with the Soviet Union, Crumm said. That, too, worked.
But it has led to more companies and jobs going overseas, Crumm said.
But it has led to more companies and jobs going overseas, Crumm said. President Ronald Reagan stopped skewing rates in favor of Japan's currency in 1987. Japan has struggled more since then, Crumm said.
However, China's case is more complicated, Crumm said. The Central Bank of China now controls the currency exchange rate, and getting out of that situation will be difficult, he said.
U.S. companies Caterpillar and General Electric are making fortunes exporting to China. Caterpillar exports mining equipment and stationary engines, he said. General Electric exports turbines, he said.
Difficult as it will be, something needs to be done to improve the exchange rate for the U.S., he said.
"We've got to elect some politicians that figure it out," he said.
Some in Congress already are working to change things. U.S. Sen. Sherrod Brown, D-Ohio, along with several others has proposed addressing the exchange rate, Crumm said.
"But he is not ... in control of the Senate. There are many others that vote the other way," he said.
Crumm urged voters to consider how candidates for federal offices would vote on exchange rates.
"There comes a time when you have to get back home again, get back to making your own goods, and all you have to do is reverse the exchange rate advantage and you're back to making goods again," Crumm said.
