I [Heart] America's Trade Deficit!

by Don Boudreaux on March 30, 2008

in Balance of Payments, Myths and Fallacies, Trade

In his brilliant book, The Myth of the Rational Voter, my colleague (and EconLog‘s) Bryan Caplan identifies the “anti-foreign bias” as a major impediment to economic enlightenment.  That bias is real and ubiquitous — see, for example, this recent essay by Peter Morici at Forbes.com.

I sent the following letter in response to Mr. Morici’s essay:

Peter Morici unloads a riotous barrage of accusations against free trade: Free trade caused, among other misfortunes, the collapse of the market for adjustable-rate mortgages, excessively high CEO compensation, inflationary monetary policy, and Uncle Sam’s inexcusable bailout of Bear Stearns (“It’s Time To Cut The Trade Deficit,” March 26).  Mr. Morici, however, doesn’t explain how allowing consumers to take advantage of bargains from abroad caused these calamities.  He simply assumes it to be self-evident that America’s growing trade deficit proves that free trade triggers countless system-wide maladies.

Alas, Mr. Morici doesn’t know what he’s talking about.  America’s trade deficit represents capital flowing into the U.S.  True, some of this inflow finances Uncle Sam’s Eliot-Spitzer-party-like spending.  But that spending is caused by reckless politicians, not consumers.  Nearly all the rest of the trade deficit represents positive investments in America – investments that not only signal continued investor confidence in the U.S. economy but, more importantly, investments that finance R&D, product development, worker training, new firms, factory modernization, and other activities that promote economic growth.  Does Mr. Morici really think that such investments harm Americans?

Sincerely,
Donald J. Boudreaux

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Anonymous August 3, 2009 at 9:58 am

America is going to keep on giving Israel anything it wants because the American Government is totally controlled by the invisible hand of the Council on Foreign Relations (CFR) which was formed back 1921 by a group of wealthy Jews.

The main purpose of the CFR is to over-throw the American Government from within then control the whole world. That is exactly why both parties like exactly alike now, regardless which party we elect to run the country we always get the exact same polices because both parties are control from within by the “CFR party”.

The American Government has been control by “CFR Party” since it was formed by Wealthy Jews back in 1921.

A lot of people think this all just too crazy to be really happening. But, I have spent many, many hours researching the CFR and all their card carrying members.

The CFR now have so much control over every major policy decision the American Government makes. I personally think this control is so major that the American People have lost total control of the Federal Government to all of the Super wealthy Jews. It is absolutely impossible to regain back control with the Ballet Box because the CFR have so much money they are just like any major Drug Cartel they buy everyone and everything that stands in their path to get anything they want.

This goes way beyond just the Federal Government, the “CFR Party” controls all of the TV stations, all of print and Newspaper Companies and all of the large International Banks and International Manufacturing Companies are also control by the CFR. There just seems to be no end to their power and control.

The “CFR Party” even controls the “American Federal Reserve, the International monetary Fund, the World Bank”. These are just a small part of their control.

I know you will think I am crazy.

But do you remember a few years ago they made a couple of movies about where America was secretly invade by people from another planet and they would inject something into the back of the necks of Americans and they would physically enter and take over the peoples body. They were trying to over-throw the entire world.

Well of course they are not entering your body and taking over control of your body. But, they do have this secret concerted plan of forcing their Global ideas upon every American Citizen regardless of what you want and the American people have no idea that this is even happening inside of the Federal Government.

The biggest problem is that this “CFR PARTY” plan will not work and they are destroying America in the process and they really do not care in the least what happens to America.

It almost looks like they are trying to deliberately destroy America.

Take NAFTA and the WTO as an example.

This was all part of the “CFR Party” original plan to FAST-TRACK these two International Global Trade deals through Congress back in 1992 and 1993. The Republicans were already on board so they bought off enough Democrats to get both NAFTA and the WTO passed.

Bill Clinton was the Democratic President at the time was given well over 109 million dollars after he served 8 years in the White House for his help to arm twist some Democrats to help pass both of these bills into law.

I keep telling everyone if the Federal Government really wanted out of this Depression we are in right now and make no mistake about that is exactly what America is in right now.

They all just keep saying next year, next year things will get better. They may really get better for a short period of time but, then we are going to fall right back into the SOUP again.

Here is why American is not getting out of this Depression so easy this time, till we bring all of the jobs back to American that was shipped off shore to China during the last 15+ years.

American needs many good paying Jobs right now. The only way America is going to create good paying jobs is to stop sending all of the good paying jobs off shore to China.

As soon as the American Manufacturing Industry Creates good Paying Jobs for the American Workers the big International Companies just moves them straight off shore to China.

That’s the very reason why NAFTA and the WTO was originally formed so all of the big International Companies could manufacture Products in China for $2/day slave labor and then bring the products back to America to the largest product purchasing market in the world and sell them for top dollar.

But, here is the problem with “CFR PARTY Ponzi Scheme”. Here is exactly why I call it a “Ponzi scheme”.

It will work well for a certain period of time, then at some point in time. Then just like every other Ponzi Scheme there will come a point you run out of buyers or people to fund the scheme.

If “CFR PARTY” plan continue to insist that all of the Industrial Companies all over the world continue to down size and move all of the high paying jobs off shore to $2/day slave labor in China.

Then at some point in time you eliminate all the people who can afford to buy the products being produced.

All of the workers that once had good high paying jobs will be laid-off or working at McDonald’s or Wal-Mart for minimum wage. Then all of the workers in China will not be able to afford to purchase the very products they are making.

Please tell me who in the hell will have enough money to purchase anything.

I think that is exactly where we are right now. Things should just keep grinding deeper and deeper until we fall into the Abyss.

If the American Government does not wake up and give up this Insane Global International Trade Police of NAFTA and WTO. America will continue falling until America is TOTALLY DESTROYED.

Here is why I say that.

I keep saying this and I am sure very few people understand exactly what I am saying because if they did they would be angry as HELL with the Federal Government almost to the point of CIVIL WAR.

I will say it one more time.

If American would pull out of NAFTA and the WTO now. America would start creating over night so many good Paying JOBS that the America Workers could not fill all of them.

I will Post another article and if you can do fifth grade Arithmetic then you should be able to understand it.

The only thing I ask of you is to stop believing everything that is being said by all of these HARVARD BEAN COUNTERS and do the math on the International Trade Numbers yourself.

Anonymous August 3, 2009 at 10:08 am

HERE IS HOW I WOULD END THE DEPRESSION IN AMERICA OVER NIGHT?

I want give you something to think about.

It is really a funny thing that the all the Highly Industrial Countries are all affected by this Financial Problem. All of these Industrial countries have one common thread that runs though all of those affected countries. However, the only difference is the degree of the Financial Problem in each country.

All the Industrial Countries of the World have been sending all their highest paid Jobs off shore to China in search of the lowest wages.

This has been going on for 15 years, every since all other Industrial Countries of the World followed America in to joining the WTO and canceling all their Import Tariffs.

America over the years has proven to be the best country in the whole world for creating new jobs, that’s why America was the wealthiest Country in the world till we joined NAFTA and the WTO in 1992 and 1993 respectfully.

Here is the problem; as fast as America creates new Jobs the Politicians advocate sending all of these higher paying Jobs off shore to Mexico, India or China in the name of Free Trade faster than America can create them.

That’s why China a third world country 15 years ago is getting much richer on the backs of American workers and America is going Bankrupt, it’s that simple.

What is the America Politicians Thinking? They are either being bought off by the Big International Bankers, International Manufacturing Companies or just plain stupid. I got a feeling it is not the latter.

I’ll bet Americans will have a change of heart about Free Trade when they have lost everything and are standing in the Soup line with their children.

The final analysis is that American Workers ends up working at Wal-Mart as a check-out or at MacDonald’s flipping homburgs and China grows much wealthier and militarily stronger every year.

If that’s not enough the Politicians all refuse to build a concrete wall on our southern border to stop the Drug Pushers, Illegal Aliens and Terrorist from entering our Country Illegally.

What the hell type of Politicians do we have in Washington D.C.?

They are allowing more Cheap Illegal Drugs to flood our country through our southern border and drug pushers killing each other on our streets. Then all these Illegal drugs are allowed to flood our streets to addict all of our young children.

These Illegal Aliens who can’t speak English or don not even have elementary school education are causing the deterioration of our Wages standards in America and taking advantage of Free Medical Services.

In the end our children will have minority status in our great country.

What would you think of your Father and Grand-Father had they left you in such a position?

Then at some point in our future you can bet one of those terrorist will walk a weapon-of-Mass-Destruction across our southern border and kill a million or more Americans.

The Question is not if this will happen? But when it will happen?

The bottom line is that the whole world wants America to stay in NAFTA and WTO because they all want some of those High paying America JOBS that our politicians are moving off shore to the cheapest wage country.

Everyone keeps saying; Harry why are you preaching Protectionism, that is what, caused the Great Depression back in 1930s.

I say to you; “That’s Absolute Bull S-H-I-T.”

You know when they tell a lie often enough it will in time become the truth.

They all say that because they either didn’t check the history of American Free Trade or they are benefiting in someway from NAFTA or WTO.

Yes, America did pull out of some International Trade Agreements by passing Smoot-Hawley Tariff Act passed into law on June 17, 1930. That’s exactly what I am suggesting we do right now.

The truth is it had absolutely nothing to do with causing The Great Depression.

Read this you will know exact how Smoot-Hawley Tariff Act, affected THE GREAT DEPRESSION:

Earlier today I visited the National Bureau of Economic Research’s Macro history Database. I clicked on Chapter 7 and then looked at the value of U.S. imports and the value of U.S. exports for each of the 120 months during the 1930s.

Turns out that for only 18 of the 120 months of that dreary decade did the United States run a trade deficit (that is, imported more, value-wise, than it exported). For each of the remaining 102 months of the decade of the 1930s the U.S. ran a trade surplus.

On an annual basis, the only year of the decade of the 1930s that the U.S. ran a trade deficit was 1936; in each of the other nine years the U.S. ran a trade surplus.

So, you see during the Great Depression American Trade Deficits was exactly the opposite in 1930s as they are right now.

This is nothing more than a 5th Grade mathematic problem.

America must pull out of NAFTA and the WTO to Survive. Here are the International Trade Balances for the year 2006. YOU FIGURE IT OUT FOR YOURSELF….

In 2006 America Exported $1,440 Billion Dollars worth of Jobs.

In 2006 America Imported $2,200 Billion Dollars worth of Jobs.

In 2006 America Imported $386 Billion Dollars of Crude Oil.

If America just stopped exporting everything in 2006 we would have LOST $ 1,440
Billion Dollars in Jobs.

America Imported ( $2,200 minus $386 (Oil Imports for 2006) = $1,814 Billion Dollars.

If America just stopped Importing all Manufactured Goods in 2006 we would have GAINED $ 1,814 Billion Dollars in Jobs.

The Question is: Would give up $1,440 Billion Dollars every year if you were guaranteed to receive $1,814 Billion Dollars in return?

That would be a Net Total Increase of $ 374 Billion Dollars of new Jobs created every year in America. These newly created JOBS would cost America absolutely nothing.

That is assuming America did not Export one penny worth of goods during 2006.

What’s the best way our politicians can create NEWS JOBS in America?

“STOP GIVING THEM TO CHINA”.

Look at all this bailout money our politicians are borrowing from China to Bailout all of their CFR buddies, the International Banksters and the Wall Street Gansters.

This is laughable and will only make things worse in the end. These bailouts will be a yearly advent and America will go farther and farther in debt to China.

The day America Pulls Out of NAFTA and the WTO, you will see all of our problems solved over night. All those International Manufactures will bust their A-S-S to bring back all those jobs they sent to China. Remember America has the Biggest and the wealthiest consumer Market in the whole world.

I am sure America will get a lot of flack for doing this. But, America must do this to SURVIVE or be totally destroyed.

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