Dual Exchange Rate Will Revive American Manufacturing, Says Economist

THE WOODLANDS, Texas—(BUSINESS WIRE)—Sept. 1, 2005— International Economist Dr. Ravi Batra, addressing over 200 owners and general managers of U.S. manufacturing companies, proposed the establishment of a dual exchange rate for exported manufactured goods. This action would stop the loss of U.S. manufacturing to countries with low labor costs. Batra spoke at the Global Shop Solutions 2005 Users' Conference August 12 at The Woodlands Resort & Conference Center.

A dual exchange rate, while not a new concept and one used by some developing countries, will make U.S. goods much cheaper for purchase in other countries. This action, applied to exports only, will improve the U.S. economy and cut the trade deficit. There would thus be two dollar-exchange rates, one fixed unilaterally by us would apply to our manufactured exports, and the other set by free markets would apply to all other international transactions.

Dr. Batra explained how the dual exchange rate could work: "For instance, we could unilaterally set the exchange rate at 5 Yuan to the dollar for export of U.S. manufactured goods to China and leave the floating exchange rate of 8.1 Yuan alone for imports, tourism, and other matters. America can import cheap and China can import cheap. This way our export prices could fall by 38 percent in China, which will then sharply increase its U.S. imports. We could take similar action with each country where America has a large trade imbalance. For example, with respect to Japan, with a standard of living much like America, our export exchange rate could be set at 80 Yen to the dollar, and our import of manufactured goods, tourism, and other matters would have a floating exchange rate of 110 Yen to the dollar. We should be proactive with each country to bring our trade in balance while exporting more manufactured goods, and abiding by the spirit of free trade embodied in World Trade Organization agreements. Bringing our trade in balance, now running at a $700 billion deficit, should create seven million-plus high paying jobs and reinvigorate our middle class."

Dr. Batra pointed out that free trade should not mean trade imbalance. Other developed countries with high wages, such as Japan and Europe, do not have trade deficits. Countries with a declining manufacturing base have an overall trade deficit.

Dr. Batra presented charts and facts showing how American manufacturing grew and flourished when tariffs existed, starting in the early 1800's. He illustrated how an area of the country becomes much poorer when manufacturing decreases. American manufacturing employment peaked in 1970 at a little over 21 million. In 2004, manufacturing employment was down to 14.8 million, about 11% of non-farm employment. Tariffs are not acceptable today, but many countries have fixed exchange rates at low levels to stimulate their exports. According to Dr. Batra, the United States should do the same.

About Dr. Ravi Batra:

Dr. Ravi Batra is the author of six international bestsellers. He has appeared on NBC, CNN, ABC, and CNBC and has been profiled in the New York Times, Time, Newsweek, and many more. In 1990, he was awarded a medal of the Italian Senate for his contributions in economics. Dr. Batra is Professor of Economics at Southern Methodist University, Dallas.

About Global Shop Solutions:

Global Shop Solutions is an enterprise resource planning (ERP) software provider that helps its discrete manufacturing customers increase profitability, improve on-time delivery, and enhance productivity. Global Shop Solutions provides its ERP software system, training, support, and consulting services as a management solution to hundreds of manufacturers in the U.S. and Canada. Global Shop Solutions serves a variety of industries, including aerospace and defense, sheet metal fabricators, machine shops, store fixture manufacturers, automotive, screw machine shops, repair facilities, and many others. Global Shop Solutions' software runs on 32-bit Microsoft Windows(TM) Server platforms.

Global Shop Solutions products include:

GS Shop Management; GS Online System/Time & Attendance; GS Materials Management; GS Sales Management; GS Financial Management; GS Link(TM); GS Advanced Production Scheduling; GS Innernet Messaging; GS Quality; GS Customer Relationship Management; GS Engineering Change Control; GS Configurator; GS Wireless Materials; GS Electronic Data Interchange; GS BusinessWeb(TM)/Ecommerce; GS SQL Database; GS ODBC; GS Business Intelligence; and the GS International System.

In addition to The Woodlands (Houston), Texas corporate headquarters, Global Shop Solutions operates branch offices in Boston; Chicago; Dallas; Detroit; Los Angeles; Washington, DC; Santa Fe, NM; Logan, UT; Cedar Rapids, IA; and Erie, PA.

For more information, please visit Global Shop Solutions on the Internet at www.globalshopsolutions.com or call 800-364-5958.

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Kathie Alexander, 281-681-1959  

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