How utterly @#$%ed up is it that two-thirds

[Hoyt]

169. Oh boy, you are going to have fun with this- I quote from "The Complete Idiot's Guide to Economics."

Hopefully it was not written for me.

First the article discusses why some economists believe trade deficits are bad. I'll skip those since you appear stuck in believing that.

Then it presents this:

"Labor unions oppose trade deficits because they believe that when imports exceed exports, jobs are being lost to overseas workers, or soon will be. On the surface, it seems a reasonable argument, but the data on trade deficits and unemployment don't support it. In the late 1990s, when the trade deficit reached record highs, unemployment dropped to its lowest level in three decades. . . . . .


"Economists who consider trade deficits good associate them with positive economic developments, specifically, higher levels of income, consumer confidence, and investment. They argue that trade deficits enable the United States to import capital to finance investment in productive capacity. Far from hurting employment, they believe that trade deficits financed by foreign investment in the United States help to boost U.S. employment. . . . . . .

"Some economists see trade deficits as mere expressions of consumer preferences and as immaterial. These economists typically equate economic well being with rising consumption. If consumers want imported food, clothing, and cars, why shouldn't they buy them? That range of choices is part of a successful economy.

"Perhaps the best view of trade deficits is the balanced view. If a trade deficit represents borrowing to finance current consumption rather than long-term investment, or results from inflationary pressure, or erodes U.S. employment, then it's bad. If a trade deficit fosters borrowing to finance long-term investment or reflects rising incomes, confidence, and investment—and doesn't hurt employment—then it's good. If a trade deficit merely expresses consumer preferences rather than these phenomena, it is immaterial. . . . . . . ."



Read more: International Finance: Trade Deficits: Bad or Good? http://www.infoplease.com/cig/economics/trade-deficits-bad-good.html#ixzz3W0Rs8ZjO


http://www.infoplease.com/cig/economics/trade-deficits-bad-good.html


I ran across this comment too, but it's just some comment to the question of whether Trade Deficits are Good or Bad. Again, I admit there is no consensus on whether a trade deficit -- particularly ours -- is good or bad.

"Trade Deficits are No Problem at All -- The U.S. experience, trade deficits for decades, proves beyond doubt that there are no problems with it at all. Our currency is very strong and our interest rates are very low because our huge imports inhibit inflation. The alternative - protecting domestic producers with tariffs, trade barriers or an undervalued dollar - would make our products uncompetitive on the world market and increase inflation while reducing our standard of living."