Container Top
Homes   Jobs   Cars   Shopping
Search

Events Calendar

EVENT SEARCH:

In This Section


Most Read Stories


Blogs:


Pets:
It Takes All Kinds

The Heldenfiles:
Tuesday Notebook

Patrick McManamon:
An interesting thought from a reader

Akron Zips:
Akron vs. Mount Union — Liveblog

Tribe Matters:
Indians announce spring dates

Cleveland Browns:
Mangini doesn't name a quarterback

Kent State Sports:
Flashes interested in another Cincinnati player

Cleveland Cavaliers:
Cavs: Yeah, on That Issue of Privacy

Buckeye Blogging:
Buckeyes Roll 100-60 / Season Outlook

Varsity Letters:
Report: Walsh baseball player commits

All Da King's Men:
More On The Fort Hood Jihadist

Blog of Mass Destruction:
Simply Incapable of Telling The Truth

Akron Law Café:
Health Care Financing Reform: (63) Commonwealth Fund Report on Primary Care

See Jane Style:
Muffle Your Muffler

Car Chase:
Clock Tender- Extending the Life of Collector Car Clocks

Let's Talk Real Estate:
Rumors: Akron Starbucks Closing

Ohio Travels with Betty:
Jack is looking for a trip to Southern Ohio the week of November 16.

Sound Check:
Aeromsith looking for new singer as Steven Tyler contemplates solo career

HRLite House:
Personal Rant – Why People Do Not Live in Northeast Ohio

Akron Gamer:
Video: 'Modern Warfare 2' hits the streets

Imbalance of blame

Many link the whopping trade deficit to ''job-killing'' imports. Actually, the numbers show such a connection doesn't exist

Published on Monday, May 12, 2008

Listen to the debate about trade, and soon enough you will hear references to the country's trade deficit. U.S. Sen. Sherrod Brown, in a recent column in the Wall Street Journal (and this newspaper), noted that in just 15 years, the gap between what Americans import and export widened to more than $800 billion a year, many multiples more than the $38 billion in 1994. Most conspicuous are the current deficits with China and Mexico, roughly $250 billion and $90 billion respectively.

The thinking often is that the trade imbalance reflects a surge of imports triggering jobs losses in this country, Americans purchasing foreign goods at the expense of their neighbors. Is the analysis correct, the larger the trade deficit the greater the number of shuttered plants and factories?

Doug Karmin of the Progressive Policy Institute and other economists point to persuasive evidence that reveals the answer is no. They have tracked unemployment data and report that higher imports and a larger trade deficit usually coincide with a declining jobless rate. That makes economic sense. A robust economy means the American market is more attractive for importers, American consumers in a strong position to purchase foreign goods.

Tellingly, Karmin highlights the five years between 1960 and 2001 when imports decreased in value (1961, 1975, 1982, 1991 and 2001). Each instance occurred during a recession, when the level of unemployment increased.

On Friday, word arrived that in March, the trade deficit narrowed due to lower demand for imports.

None of this should be seen as diminishing the plight of workers and companies struggling through a profound economic transition. Their difficulties require an enlightened response that has less to do with particular trade policies and more to do with achieving universal health care, adjusting public investment and devising a more equitable tax code and improved pension policies. What shouldn't be missed is that the whopping trade deficit tells us something else about the shape of the national economy.

Put simply, Americans do not export enough to cover the cost of the imports all of us purchase. That argues for expanding access to foreign markets, Americans selling more goods abroad. More, it signals that Americans have been spending beyond their means, and thus the country must borrow money from overseas, from the Chinese, for instance, to make ends meet. The American thirst for oil has played a large role in driving the size of the trade deficit, especially as gasoline prices have soared.

Americans should be worried about relying too heavily on foreign creditors (though those creditors have a huge stake in American prosperity). In that way, they should find the trade deficit disturbing.

What can be done? Here is another realm in which reducing the country's consumption of foreign oil would reap benefits. Equally sound would be increasing the country's savings rate, most notably, by addressing the federal budget deficit (an altogether different imbalance) and taking steps to encourage individual savings. So, yes, target the trade deficit. Just do so for the right reasons.

Listen to the debate about trade, and soon enough you will hear references to the country's trade deficit. U.S. Sen. Sherrod Brown, in a recent column in the Wall Street Journal (and this newspaper), noted that in just 15 years, the gap between what Americans import and export widened to more than $800 billion a year, many multiples more than the $38 billion in 1994. Most conspicuous are the current deficits with China and Mexico, roughly $250 billion and $90 billion respectively.

Get the full article here.


Story tools

Email  Email   Print  Print   Save  Save   Reprint  Reprint   Popular  Most Popular   Reprint  Subscribe

Share this story

AddThis Social Bookmark Button















Most Commented Stories