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Response to Zalatix (Reply #36)

Wed May 16, 2012, 07:30 AM

44. You don't seem to grasp the difference between Trade in Services and Trade in Goods,

or what the economic and policy implications of that difference are.

Here it is in a nutshell: the former benefits the US economy (producing a net increase in American jobs in that sector); meanwhile, the US has a huge deficit in Trade in Goods (it imports more than it exports), which has resulted in (and is in part responsible for) a large loss in jobs in manufacturing. A large chunk of the imbalance in Trade in Goods, however, is imports of oil, and that has gone down somewhat.

That overall trade deficit is the result of policy decisions that have allowed multinational corporations and banks to export enormous, uncontrolled flows of capital to build plants and factories in lower-wage countries, which has led to the deindustrialization of America. If you want to reverse that, we will need to bring the banks and multinational corporations under closer regulation. It's not too late to try.

The approach you suggest of imposing additional tariffs and getting into a trade war with Asian exporting countries is likely to have some very undesirable, unintended consequences, including their sell-off of holdings of US debt and dumping of Dollars, as well as a closing of doors to the US service sector.

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Zalatix May 2012 OP
Fumesucker May 2012 #1
redgreenandblue May 2012 #2
baldguy May 2012 #3
leveymg May 2012 #4
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Zalatix May 2012 #36
LineLineLineLineLineLineLineLineLineReply You don't seem to grasp the difference between Trade in Services and Trade in Goods,
leveymg May 2012 #44
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