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This horse – although old, blind, deaf, dull, decrepit, diseased, deformed, deranged, and hard-ridden – just won’t die. So I write to the Wall Street Journal:
You report that “The U.S. trade deficit with China expanded to $25.63 billion from $25.52 billion in October, reversing some of the improvement of recent months” (“U.S. Trade Deficit Narrows [2],” Jan. 13).
Accepting for the sake of argument the popular myth that, in this world of nearly 200 nations, America’s trade balance with any one nation is meaningful and relevant, I must nevertheless ask: Why do you so blithely label the recent shrinkage of this trade deficit as an “improvement”? The U.S. trade deficit rises whenever foreigners invest more heavily in America; are such investments a cause for lamentations? Do the factories, machines, worker training, R&D, inventories, retail outlets, pension contributions, and infrastructure throughout the U.S. that are financed – either directly or indirectly – by foreign investors hurt Americans? Is it true that our economy is necessarily “improved” whenever such investments shrink, and harmed whenever such investments expand?
Sincerely,
Donald J. Boudreaux