This started out as a reply to a comment on D Wreck's excellent diary John McCain's Invisible Tax on the Middle Class, which I encourage you to read. One commenter said,
We collectively have a choice as to what items we buy, how much gas we use, and putting officials into legislature that demand higher fuel efficiency standards, more effective and safe mass transportation, and push for alternative energy.
Do we remember the "Buy American" campaign of the early 90's?
My point is that government has not necessarily done this to us, through lack of education and understanding we have done this to ourselves.
However, we are also empowered to change it.
I decided to use my diary entry for today to amplify my response, because the system dynamic involved is something that I think is very powerful and poorly understood by most.
If we increased our energy efficiency (for example), then oil-exporting countries wouldn't have as many dollars on hand to buy our debt. That's true. However, that wouldn't solve the problem, because they're not who determines how big our national debt is.
The money flows between countries have to balance; if they don't, then the exchange rate will shift until they do. Metaphorically, it's like having two buckets connected by a pipe beneath the water level: if you scoop water out of one bucket and put it in the other, it'll just push more water down through the pipe until they're even again.
Sure enough, our perennial current account deficits (buying more real goods and services than we sell) are offset by equal-and-opposite capital account surpluses (selling more financial instruments than we buy). Selling all that Treasury debt to foreigners makes their goods and services artificially cheap to our cash-strapped families, who lost the good factory jobs making the stuff that they're now importing.
Let me put that another way. Whenever we import real stuff -- barrels of oil from Saudi Arabia, crates of toys from China, tech support from India, whatever -- that leaves dollars in foreign hands. Eventually, those dollars need to find their way back, as the reservoir of unspent dollars in that other country builds up pressure. If we make too much insubstantial financial stuff (including Treasuries) for them to buy, then they'll do that instead of buying our real stuff, and so fewer of us will be employed making real stuff. That's fine with Big Business and its Elite owners; their profits buy as much luxe whether their workers are here or overseas.
Don't you think it's funny how conservative pundits will squack (like they've been goosed) about the "crowding out" of private investment by public services, but they don't give a peep about the crowding out of domestic production by government debt? And they get it doubly wrong, since this country is so far Right that even the Left is mostly free-marketeers. Modern Democratic economic policy, including Obamanomics, focuses on mitigating market failures caused by positive or negative externalities -- like providing transportation infrastructure that enables economic activity to everyone's benefit, or regulating against pollution that hurts the public for private gain -- no "crowding out" involved.
So sure, no one holds a gun to our heads and makes us buy all those imports. They don't have to. It's logically unavoidable under the wrist-slashing budget policy of borrow-and-squander conservatives. We cannot have our cake and eat it too. That just won't happen. No matter how much we might wish it were otherwise, TANSTAAFL.
And there you go. It isn't just a coincidence that the middle and lower classes feel such pain under Republican presidents. As if the regressive hidden tax of monetary expansion weren't bad enough, financial physics also incentivizes the export of jobs.