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State of Union

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Submitted By ldmeisel
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Luis Daniel Meisel

Would you back me up what you just said Mr. President?

As any other politician’s speech in the world, information is accommodated to meet the emotions of a crowd thirsty of prosperity. The state of the Union is not exempt. President Obama delivered a speech that lacked in many cases statistical analysis to support what he said. In the speech however, many issues were mentioned some of them which I agree with him, some of them not. Therefore, this lecture left us with a lot of information that deals with international economics. My job on this essay is to express my opinion upon three issues. The economic deficit of America, American exports and local manufacturers, and last insourcing jobs and tax cut for businesses.

First let’s talk about the American deficit that is based on the money this country owes to the world. Let me tell you that this is one of the favorite issues that politicians always use again and again in the State of the Union. It is an opportunity to threaten American population, to give wrong numbers of recovery and to create false enemies where all the Americans United fights against a virtual financial enemy, nowadays China was the one elected. President Obama said that the deficit is falling more than ever after WWII. I would like to have asked him. By what percentage change compared to every year of the past century of America is the deficit falling? The deficit would never be paid for two reasons, one is because many of the people who own the debt are Americans and second because the debt is in our own currency, US dollars. So whenever you want to pay it, go ahead and print out bills. The real problem of the debt is whether our RGDP is able to afford the burrowing of the money. This tells us if we are able to cover up with production what we owe, how is the American economy standing and if we are able to pay out interests to other nations. However, how the deficit stands today in terms of RGDP was never addressed.

Throughout the speech president Obama said that he was subsidizing small businesses and there were new free trade treaties with Asia Pacific and Europe. This is great for America! It is a potential opportunity for economic expansion and job creation. However, he said that 98% of American exports were due to small businesses. Once again, statistical evidence is switched to meet the lecturer’s needs. America’s automobile industry for example as well as many other sectors such as heavy machinery, technology and agricultural producers manufactures in increasing returns to scale, meaning that they mass-produce. These products make up a huge amount of the US exports to the world. Therefore, I don’t believe at all, that 98% of American exports are due to small businesses. On the other hand he mentioned that every day more Chinese manufacturers are planning to change facilities from China into the United States. I want to know what statistical evidence he has to back up that statement in which he was able to foresee the future.

On the other hand, he said that more and more Americans are insourcing labor from China into the United States. In other words, US firms are bringing Americans back home. Once again Mr. President, I would like to know their names and I would also want to know why a firm would bother to go all the way to China to look for compatriots to work here. If I was a firm owner I first would look into the American population to see if I have the skill people to get the job done and if this is not the case, I would look into the whole world where I have billions of choices for cheaper and efficient workers, one better than the other. Finally, he said that he would make tax cuts for businesses in order to incentivize them to invest in the US. This fiscal policy is extremely inefficient; the last thing a business cares when investing is about taxes (Except for extreme cases such as France). A business mainly cares about its expectations of the future, whether or not he is going to be able to achieve long-term profits, whether or not it is foreseeable a return to its investment. Quite frankly, Mr. Obama is a great speaker but not a great statistician.

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