Indeed we have much we can learn from the Germans. Their big success in creating prosperity and jobs at home is export market domination. Germany has an even-larger trade surplus than China ($227 billion vs. China's $172 billion), the lowest unemployment rate in 20 years of 6.7% and German industry is recruiting qualified foreign workers to fill skilled manufacturing jobs so that it can meet the demand for its exported products.

How do they do it? Is it because German products are lower priced than US products? No, that's not it at all. The Euro has increased in value with respect to the dollar by 55% over 10 years so German prices are correspondingly higher priced that US-made products. And Germany is 99% dependent on imported petroleum. Germany's economy is only 1/5th the size of ours and its per-capita imports from China are slightly more than ours. Yet while the US has a $300 billion trade deficit with China (which most in Washington blame on China's overvalued currency), Germany has a healthy trade surplus with China because it exports 7.9 times more per-capita to China than the US. How can they possibly do so well in China with their high-priced products?

Very simple: They encourage their brightest and best to relocate to China, set up discribution and service networks and sell their products to capture that market. Germans who do this are patriots back home because they sell the products that create jobs for German workers and prosperity for that nation.

The US does just the opposite. We have a world trade deficit of $758 billion which translates into 7.9 million destroyed jobs producing for export and $136 billion in lost tax revenue these destroyed jobs fail to generate. Our govenment goes out of its way to discourage Americans from relocating abroad to sell our very competitively priced products. Although China is the 2nd largest import market in the world (the US is #1) we only capture 5.9% of that market.

We discourage Americans from going abroad to sell what we produce by continuing to subject them to US income tax as if they never left home. So they are taxed once by the foreign country where they live and then are taxed a second time by the IRS on that same income. There is a limited foreign earned income exclusion and they may be able to claim a foreign tax credit for some foreign taxes to mitgate this double taxation, but even if foreign taxes are so high that foreign tax credits completely offset their US tax obligation, they must still file US tax returns and fill out numerous additional tax forms to to with them that are so complex that this cannot possibly be done without the aid of expert tax consul which is not avalilable abroad and must be obtained in the US. And it is not cheap. They must also submit detailed FBAR reports on their foreign bank accounts where they live and, beginning this year a new FATCA report on all their foreign assets. The penalties for invertent errors in these latter reports are so draconian that even an innocent mistake with not tax consequence can range from $10,000 up to everything you own.

And under the 2010 FATCA legislation, foreign banks must submit detailed reports to the IRS on all their accounts held by US persons, or be subject to draconian penalties on money transfers from the US. Most foreign banks are closing down their accounts with US persons rather than submit to this extraterritorial requirement of US tax law. You can't survive in a foreign country without a bank account to deposit your foreign currency paycheck and out of which to pay your living costs.

Products don't sell themselves. It takes feet on the ground to this which the Germans have but the US does not. It is just that simple.

Until the US abandons this citizenship based taxation and adopts the residence based territorial taxation used by Germany and every other civilized country (except the US), we can forget about creating jobs through competing in the export market. Only 8% of our GDP is created by Exports, whereas for Germany it is nearly 50%. The difference is the result of our tax policy which treats Americans who go abroad, not as patriots, but as tax-evading traitors. So the Germans go and capture the business while, thanks to our tax laws, American stay home and blame everything on China.

Our trade deficit problem lies not in Beijing but on Capitol Hill and Pennsylvania Avenue. Does anyone in Washington really care?