Ptolemaic Economics

by Don Boudreaux on September 29, 2011

in Balance of Payments, Myths and Fallacies, Seen and Unseen, Trade

Here’s a letter to the New York Times:

C. Fred Bergsten claims that eliminating America’s trade deficit is a costless way to boost employment in America (“An Overlooked Way to Create Jobs,” Sept. 29).  He’s mistaken.  Among his several errors is his illegitimate assumption that all dollars that foreigners don’t spend on American exports remain idle, effectively withdrawn from circulation.

Consider two cases.  First, Americans buy $1 million worth of textile imports from the Chinese who then buy $1 million worth of pharmaceutical exports from Americans.  The result: balanced trade.

Second case: Americans buy $1 million worth of textile imports from the Chinese who then buy $1 million worth of land in Texas.  The American seller of the land immediately spends this $1 million on American-made pharmaceuticals.  (Perhaps the Texan is opening a pharmacy.)  The result: a $1 million U.S. trade deficit.

In both cases, Americans producers sell an additional $1 million worth of output as a consequence of Americans importing $1 million worth of goods.  So – although America runs a trade deficit only in the second case – the employment effects in both cases are identical.

Such an example, being entirely plausible, is sufficient to prove the absence of any necessary negative connection between trade deficits and employment.

Sincerely,
Donald J. Boudreaux

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{ 115 comments }

Surfisto September 29, 2011 at 10:05 pm

If the Chinese buying the land in Texas is a FDI, so the current account would now be zero, suppose they wait a year to buy the land. Is there a current account deficit until the money “comes back.” If so does that lag create any measurable distrubances?

muirgeo September 29, 2011 at 10:05 pm

Wow… I get it now. I am quitting work tomorrow. No need to work I’ll just trade things I already have for things I want and need.

I’ll sell my car for some gas and my BBQ grill for some meat….I’ll sell my house for that Van Gogh painting we’ve been wanting…

Wow why didn’t I think go this before. I was thinking I needed to stay productive to maintain my wealth when I can just trade stuff I already have for all the things I needed.

Thanks Don!

I vote the Professor for Mayor of Squanderville

http://www.youtube.com/watch?v=bGo_NL-eclw

Surfisto September 29, 2011 at 10:12 pm

Muirgeo,
Has Warren Buffet has ever used credit to make an investment?

The Other Tim September 29, 2011 at 10:18 pm

You can’t have it both ways. You can’t liken the economy to personal finances when it’s convenient, but balk at it when it’s inconvenient – say, comparing Keynesian stimulus to a family spending twice what it earns.

The Other Tim September 29, 2011 at 10:23 pm

Beyond which, the comparison itself is flawed.

When foreign companies buy assets, they gain the profit to be gained from an asset. This increases the number of American dollars foreigners have to spend. Since American dollars can (largely) be spent only in America, as foreigners gain capital goods, they also gain more dollars which can only be spent importing American goods. Which is exactly what you want them to do.

Hence, once again, we see that trade deficits are temporary and largely self-correcting.

Stone Glasgow September 29, 2011 at 11:14 pm

Trade deficit is the brilliant fiction of politicians who want more barriers to trade. They want to use government to artificially help their American friends who are losing market-share.

The results is higher prices for all Americans. For someone who claims to love the middle class and hate corporations, it is surprising that you would recommend such a policy, but that is the purpose of the trade-inbalance fairy tales — to convince lay people that tariffs are needed and beneficial for the average American.

The truth is exactly the opposite.

muirgeo September 30, 2011 at 1:54 am

Stone,

The truth is we are on the verge of global financial collapse…. but don’t let reality interfere with what YOU believe.

Randy September 30, 2011 at 4:31 am

Muirgeo,

I’d call it a correction. Political organizations worldwide have spent the last several decades printing money and handing out favors to friends. Big surprise, people are realizing that the money isn’t really worth what the numbers printed on the paper say, and the friends of politicians are starting to see that the favors are going to end. As the saying goes, its all good.

Slappy McFee September 30, 2011 at 9:36 am

Sweet — the trade imbalance between China/US is causing a global financial collapse. If only all these silly consumers/producers would stop trading with each other.

As an experiment GudDucktor, spend the next quarter only treating people EXACTLY like you. Just little, white, angry, spiteful man-childs.

Methinks1776 September 30, 2011 at 10:06 am

Muirdiot,

Watcha mean “on the verge”? The financial system, perverted beyond recognition by relentless regulation (read: government and crony manipulation), has already collapsed. Uncle Ben and cousin Trichet are holding up the facade with 2×4′s to try to fool people into thinking it’s all okay.

SweetLiberty September 30, 2011 at 10:29 am

Muirgeo is brilliant at recognizing there is a problem, but horrible at diagnosing the actual causes. Let’s hope he is much better as a physician than an economist. Otherwise, he is forcing his healthiest patients who lead the most exemplary, productive lifestyles to excise their healthy organs and give them to the least productive drunkards and drug addicts.

Methinks1776 September 30, 2011 at 1:03 pm

SL,

In nearly six years, I’ve noticed an ability to neither identify nor diagnose symptoms.

Fred September 30, 2011 at 1:14 pm

Muirgeo is brilliant at recognizing there is a problem, but horrible at diagnosing the actual causes.

How does that make him any different from the average physician?

Most of what they do is treat symptoms – “Here’s a pill.”

vikingvista September 30, 2011 at 3:59 pm

Some kinds of physicians deal almost entirely in diagnosis.

Stone Glasgow September 29, 2011 at 11:09 pm

Buffett is economically illiterate.

muirgeo September 30, 2011 at 1:56 am

THAT explains his tens of billions…. Do you guys care about how what you say matches what is actually happening in the real world?

Economic Freedom September 30, 2011 at 2:09 am

THAT explains his tens of billions….

What does that have to do with knowing anything about economics? You’re an idiot.

muirgeo September 30, 2011 at 2:24 am

What does knowing something about economics have to do with reality or with our economy.

What you know about economics is as useful to our economy as what an astrologer knows that is useful for astronomy.

House of Cards September 30, 2011 at 5:15 am

I think you are an idiot.

The Other Tim September 30, 2011 at 2:56 pm

Brilliant and well argued retort from Muir and House of Cards. You’ve convinced me. Where do I sign up for the socialist party?

/sarc

Economics and business are interconnected in roughly the same way as biology and medicine. They *aren’t* the same thing, and neither Buffet, nor Trump, nor Perot before them were qualified to weigh in on economic matters.

Stone Glasgow October 1, 2011 at 8:58 pm

Tim, I think biology and medicine have a lot more to do with each other than economics and productive private-enterprise. One can be very productive without knowing much of anything about economics (like Buffett).

Stone Glasgow October 1, 2011 at 9:01 pm

Muirgeo, if the Koch brothers are rich, does that make them right about economics?

House of Cards September 30, 2011 at 5:14 am

I think you are.

Economic Freedom September 30, 2011 at 3:25 pm

I don’t think of you at all.

SweetLiberty September 29, 2011 at 11:10 pm

Muirgeo,

Don’s analogy does show Americans being productive – in pharmaceuticals. The difference is how a trade deficit is calculated vs. a direct trade. Real estate is an investment like any other. Perhaps Don could have had the Texas land seller turn around and purchase land in New Zealand with the million he received from the Chinese. Then, the guy in New Zealand could use U.S. dollars to invest in pharmaceuticals. In that event, no net loss in land would arise. The point is, over time, no actual deficit exists. Trade deficits are simply an inadequate accounting device for a complex system where multiple international transactions cannot be accurately tracked.

If we really had nothing the Chinese and other nations wanted in trade, they would stop selling us there goods and the dollar would be worthless.

vikingvista September 30, 2011 at 12:21 am

So, the pharmaceutical company is only productive when sells to Chinese, but not when it sells to Texans? How do you figure?

muirgeo September 30, 2011 at 1:52 am

It’s not a trade deficit we have , it’s a productivity deficit. You don’t increase your personal wealth or the wealth of nations by decreasing your productivity and using personal/ national assets to pay for your consumption.

And then there is the real economy that should be booming based on your premises of the greatness of “free trade” yet we see near global economic collapse on our door step as we look out the peep hole.

I get an image of Libertarian Talking Heads talking faster and faster as they all circle a toilet drain faster and faster.

What needs to be studied here is not economics but human psychology…

Economic Freedom September 30, 2011 at 2:12 am

It’s not a trade deficit we have , it’s a productivity deficit.

You must make this stuff up as you go along.

All studies have shown that US productivity has increased over the past few decades. Don and Mark Perry have posted a number of links to sources proving this.

muirgeo September 30, 2011 at 2:21 am

It hasn’t… they are not being truthful.

When a company moves it’s production overseas and it counts as American productivity that is meaningless.

Economic Freedom September 30, 2011 at 2:27 am

that is meaningless

Only to fossilized Marxists like you. To those who are rational, it means that a worker can produce more of a good or service per unit time than he could previously.

muirgeo September 30, 2011 at 10:46 pm

I’m the Marxist? You’re the one justifying the use of communist labor under the false pretense that it is more productive. It’s NOT more productive…it’s more communist… you Pinko! Economic freedom my ass…. you wouldn’t know it if it smacked you upside the head.

brotio October 2, 2011 at 2:32 am

I’m the Marxist? – Yasafi Muirduck

Well, you’re the one who often cites Das Kapital as scripture.

josh wade October 4, 2011 at 1:18 pm

You are either truly clueless or you purposely antagonize people on here. You can’t really be that clueless, can you?

SweetLiberty September 30, 2011 at 10:44 am

Muirgeo,

This bears repeating because you are slow… you’ve won! The “near global economic collapse” cannot be due to libertarian policies since there haven’t been any libertarians in the White House and only one in all of Congress (who is a RINO), but rather liberal policies which have dominated for decades, growing the size of government to unsustainable proportions.

Now, try to get this (I’ll use simple words)… we do NOT HAVE FREE TRADE in the way any libertarian would desire it unfettered by government regulations, tariffs, etc. But even if we did, free trade alone cannot overcome an overreaching government that hampers production, overtaxes its citizens, stifles education, and creates enormous entitlements which cannot be funded.

So rather than rail at libertarians who wield no power, look in the mirror for the cause of our impending global economic collapse and give yourself a big smile because – you’ve won!

Darren October 2, 2011 at 12:57 pm

Murigeo,
You bring up “global economic collapse” (or close to it) a couple of times. I doubt you have come to this conclusion on your own. Few would or could. This would have to be someone with some track record of credible economic analyses claiming we are indeed near “global economic collapse”. Who or what might this be? I don’t believe I’ve ever run across this extreme of a claim.

muirgeo October 2, 2011 at 1:48 pm

Darren I would suggest you listen to Alan Harvey’s Demand Side podcast. They are free and only 10-15 minutes twice a week.

They go way back and you can see him calling this collapse. His explanations fit reality with far more cogency than what we see here on this ideologically based blog.

I’ve been comparing what people like Harvey say with what people like Don say and it’s clear to me which one is based and backed up best by both logic and reality.

http://www.demandsideeconomics.net/

Ghengis Khak October 1, 2011 at 3:52 am

The policy you seem to advocate, translated into your analogy, is to not be able to trade with any of your neighbors. In which case, you don’t even have the car, grill, or house since you aren’t able to produce these things yourself. How exactly does that make you better off?

I eagerly await your non-sequitur and abusive response.

CalgaryGuy October 1, 2011 at 11:39 pm

Is it kinda like how people argue my family wealth increases whenever my daughter helps herself to some money out of my wallet as she heads out to the mall? After all, income disparity between her and I grows with every raise I get, not to mention our familes income per worker has gone way down since she started her part-time job, so it’s only fair some of it gets redistributed to her and her happiness at getting that new pair of shoes is greater than my displeasure at her helping herself to my wallet.

Invisible Backhand September 29, 2011 at 11:14 pm

As always, that’s a subscriber only link that doesn’t work for the rest of us. Here’s the non-subscriber link.

BY virtually ignoring trade, President Obama and Congressional Republicans are missing a major opportunity to create jobs. The United States runs an annual trade deficit of about $600 billion, or 4 percent of our entire economy. Eliminating that imbalance would create three million to four million jobs, according to Commerce Department estimates, at no cost to the budget.

http://www.nytimes.com/2011/09/29/opinion/an-overlooked-way-to-create-jobs.html

Invisible Backhand September 29, 2011 at 11:15 pm

While I’m here:
Good article on regime uncertainty (it’s BS)
http://www.epi.org/publication/regulatory-uncertainty-phony-explanation/

muirgeo September 30, 2011 at 1:59 am

IB,

You mean there is no Uncertainty Fairy???? That’s a bit insensitive of you. A lot of people are really counting on there being one and you’ve destroyed their beliefs.

Economic Freedom September 30, 2011 at 2:31 am

Cool. Here’s a better article on Regime Uncertainty (it’s real):

http://www.humanevents.com/article.php?id=35292

Invisible Backhand September 29, 2011 at 11:16 pm
josh wade October 4, 2011 at 1:24 pm

Everyone who paid in should use it regardless of your beliefs, they stole your money to put into it, why wouldn’t you want some of it back?

Stone Glasgow September 29, 2011 at 11:17 pm

So if a little girl sets up a lemonade stand in her front yard and purchases lemons from one neighbor and honey from another using her allowance money, but sells no lemonade to those neighbors, has her “trade deficit” harmed her? Has it harmed her neighbors? Harmed her customers?

Who has it harmed? Where is the enemy?

Fred September 30, 2011 at 8:30 am

If a little girl sets up a lemonade stand in her front yard without first spending several hundred dollars on licenses, nice men with guns will come and confiscate her earnings before shutting her down.

Stone Glasgow October 1, 2011 at 9:14 pm

She would need to change the zoning of her home to commercial first as well, but all those rules are for her protection. Someone surely must protect consumers from poisoned lemonade and the blight of commerce.

Don Lloyd September 29, 2011 at 11:41 pm

The ideal situation would be a 100% trade deficit. Exports are costs, not benefits. If the Chinese could re-export the US dollars to visiting Martians because they liked the artwork, the US would be better off, not worse. If the dollars never return the remaining dollars will have a higher purchasing power.

Exports are a drag on the domestic US economy as they sap both labor and material resources. There is always more work to do, and jobs are primarily limited by government action and regulations. The high wages that export jobs may provide only provide a benefit for the actual workers receiving them. Everyone else suffers from the increased ability of high wage workers to bid goods and services away from them. High wages are only a pure benefit if they produce a higher quantity and quality of goods and services for domestic consumption, perhaps indirectly, and perhaps in the future.

Regards, Don

Ken Royall September 30, 2011 at 3:42 am

Yes, those dumb Chinese are really losing by exporting all of that stuff to us. The trillions of dollars they are getting in return are an illusion. Those Germans are pretty dumb too, they should just consume everything they can make at home and forget about trading with anyone. Oh wait, they are the most financially stable country in the EU and they are running trade surpluses. How can this be? If there is “always more work to do” the why are millions of people without jobs in the US? What nonsense.

Don Lloyd September 30, 2011 at 4:11 am

@Ken,

I suspect that you may find that the key to reading and comprehending sentences is to continue reading to the period.

Regards, Don

Steve_0 September 30, 2011 at 12:00 am

I have a bad habit of handing cashiers my money with my left hand, and picking up the gallon of milk with my left hand. But when I teach, I tend to write on the board and point with my right hand, and I always pick up my paycheck with my right hand.

Obviously, you can imagine by now I have an enormous left-hand / right-hand trade imbalance. It’s surely unsustainable.

Price B September 30, 2011 at 1:18 pm

Fantastic. Simply fantastic.

This made my day.

vikingvista September 30, 2011 at 1:58 pm

Nice.

David Onkels September 30, 2011 at 12:22 am

It’s amusing that you still have to argue Bastiat’s seen and unseen after all these years.

Chucklehead September 30, 2011 at 1:51 am

The unseen will always have to be pointed out because it is unseen.

House of Cards September 30, 2011 at 5:11 am

You are not the designated person to do the pointing out. You are a knucklehead.

vikingvista September 30, 2011 at 2:00 pm

Interesting point. Thanks for your thoughtful contribution to intellectual discourse.

Don Lloyd September 30, 2011 at 2:34 am

“… Among his several errors is his illegitimate assumption that all dollars that foreigners don’t spend on American exports remain idle, effectively withdrawn from circulation….”

I question this entire concept. If money remaining idle or being withdrawn from circulation (VOLUNTARILY BY ITS OWNERS) were a problem, wouldn’t a necessary corollary be that the Federal Reserve CAN create prosperity by printing money?

The key is whether someone, foreign or domestic, perceives an opportunity for profit that eventually increases the supply and quality of goods and services for domestic consumption. Money is secondary.

The marginal investment that is blocked or enabled by the last increment of credit will tend to be the most imprudent of all investments. Since the future is uncertain, it is optimum to have investment failures mixed with investment successes. This almost guarantees that the last marginal incremental investment will be a failure.

Regards, Don

Don Lloyd September 30, 2011 at 6:21 am

To follow up, let’s say that 75% of all investments are successes and 25% are failures. Here we will ignore the uncertainty of the future that prevents knowing in advance whether a particular investment will be a success or a failure.

Since failed investments waste resources and negatively impact the returns of the successful investments, why don’t we just withdraw 25% of the money in the economy so that the failed investments will not be funded. Because it won’t work. If nothing else is changed, the unit exchange value of money will tend to increase by one third and the 75/25 split between success and failure will return, just at lower nominal price levels.

The blessings of money come from the existence of a monetary economy, and not at all from the quantity of money.

Regards, Don

kyle8 September 30, 2011 at 7:04 am

It comes a little bit from the quantity of the money. Money is just a facilitator of transactions. If you did not have enough money in circulation then transactions would have to degrade to the point of barter of else some other thing would be used as money, perhaps gold or tulip bulbs, or stones with a big hole in them.

You have to have an adequate supply of currency to facilitate all the transactions but your main point remains.

Don Lloyd September 30, 2011 at 8:18 am

@kyle8,

I have now reached the point where the only currency I carry and use are $20 bills, and I only use them for haircuts, gasoline (because it’s faster) and health insurance co-pays. Otherwise, it’s debit and credit cards. In the rare case where I have to accept change, I dump it in the center console of my car and always leave the car unlocked. The only exception would be to put $5 and $10 bills received in change in my pocket with the $20′s until I can get rid of them.

Regards, Don

Economic Freedom September 30, 2011 at 3:22 pm

If you did not have enough money in circulation then transactions would have to degrade

Define “enough.”

It was all worked out by David Ricardo long ago: the specific quantity of money in an economy is irrelevant. The ratios at which money and goods exchange — which is a fancy way of saying “prices” — would simply adjust, up or down, to reflect the quantity of money and the quantity of goods. With lots of goods and few dollars, each dollar would have lots of purchasing power; with lots of goods and even more dollars, each dollar would have little purchasing power. Transactions don’t “degrade”. Transactions merely adjust.

kyle8 September 30, 2011 at 8:14 pm

Nonsense. If the supply of currency was exactly one dollar, then everyone would be forced to use another currency or just barter.

vikingvista October 1, 2011 at 4:18 am

Kyle,

Yes, there is a small change issue as you reach the limits of a money’s divisibility, but Ricardo is still correct. For instance, the money could be gold, divisible down to an atom, or digital, and the issue disappears. Although, perhaps there could be some issues having to do with the rate of deflation, and definitely with the method of deflation.

Economic Freedom October 1, 2011 at 12:03 am

Nonsense. If the supply of currency was exactly one dollar, then everyone would be forced to use another currency or just barter.

Fool!

(1) In a free market, the supply of currency — meaning, that commodity chosen by the market to be its medium of exchange — could never be just “1″ of anything. (2) If trade, for some reason (e.g., a horrible war with Krugman’s space aliens) ever did “degrade” into direct barter, those engaged in bartering would soon find some good that they all valued in common as another medium of exchange and money would reappear. Money is a market-generated phenomenon and came about through barter.

You’ve been harping on the same old, out-of-tune string about an “adequate” supply of currency to facilitate all transactions, yet you’re still unable to define “adequate.” You also can’t define “all transactions.” I’ll take that as a confident sign that you don’t know what you’re talking about.

“Money” is just a commodity, and obeys the same law of marginal utility as any other commodity: the more there is, the lower the utility of each unit (lower purchasing power); the less there is, the higher the marginal utility of each unit (higher purchasing power).

If there were only ONE unit of a money-commodity — gold, for example — it’s highly doubtful that the market would choose to keep using it as a medium of exchange at all. It would simply be a unique good — like a single unique Rembrandt painting or Stradivarius violin — and the market would choose some other commodity as its medium of exchange.

kyle8 October 1, 2011 at 8:28 pm

Nothing you just wrote in any way disputes my point that if there is not enough currency then people will turn to another currency or to barter. I don’t know why you seek to hold on to your ideology when it is so obviously wrong .

Don Lloyd October 1, 2011 at 12:57 am

@kyle8,

I think you’re confusing the quantity of money with the quantity of pieces that the quantity of money is made up of.

If the quantity of money is $100, it might be made up of one $100 Federal Reserve Note or it might be made up of 100,000 tenth pennies. Clearly the tenth pennies will be more useful for transactions. Alternately, the quantity of money can be made up of computer entries, in demand deposit accounts, for example, bypassing the problem entirely.

Regards, Don

kyle8 October 1, 2011 at 8:30 pm

That is a distinction without a difference What ever you called the currency you would have to have enough disparate parts of it or it would cease it’s main function which is to FACILITATE TRANSACTIONS.

PrometheeFeu September 30, 2011 at 12:58 pm

That’s always my reaction. Can you imagine how amazing that would be if the Chinese did nothing with our dollars? If that was the case, the appropriate response would be to buy more printing presses for the Fed and just print money as fast as possible. In fact, this would all be most inefficient. Instead of anyone working, we should just start a new bank and give a free bank account for every Chinese person. Whenever an American person wants something from a Chinese person, they negotiate a price, call up the bank and the bank just raises the number in the bank account of that one Chinese person. Of course, because the bank account is denominated in dollars and the Chinese have a psychological block around doing anything with dollars, they would never withdraw any money at all. Please make the trade deficit “worst”! I want free Chinese stuff!

Ken Royall September 30, 2011 at 3:51 am

From the CATO article:

“The commentators’ flawed critique suffers from an overly narrow view of trade. A trade deficit doesn’t mean those dollars flowing abroad just disappear. They quickly return to the United States. If they are not used to buy our goods and services to export, they are used to buy American assets — Treasury bills, corporate stock and bonds, real estate and bank deposits.”

This is a pretty big assumption. China or any other big exporter to the US does not have to buy our T-bills, stocks or real estate. They could easily invest money in any number of things or places around the world.

kyle8 September 30, 2011 at 7:07 am

But whoever they invested with would still possess dollars, so eventually they would have to come back to be valuable.

However, this raises a question, If the dollar were fully convertible to gold then perhaps trade deficits would matter. China could demand gold for it’s dollars.

I haven’t seen anything on that.

vikingvista September 30, 2011 at 1:07 pm

If USD had been fully convertible all along, the rise in USD/Au purchasing power in the USA would have naturally drawn the gold back to the USA. Supply demand dynamics create a natural balance.

I suppose some might argue problems resulting from money scarcity, pointing to events occuring near the Great Depression. I don’t know if it is the the Au standard or central banking to blame for that (well, I have my opinion).

vikingvista September 30, 2011 at 12:56 pm

There are other countries that circulate USD, but they are relatively insignificant compared to the US economy, so that foreigners who accept USD in countries that don’t circulate them, only do so ultimately because of what those USD can buy in the USA. That is, the foreign appeal for USD is mostly the result of USD purchasing power in the USA.

But even if that were not the case, it isn’t an issue for Americans, unless for some reasom you think a slow orderly deflation is an issue. Money is an intermediate good. Once you’ve traded it away, e.g. to a foreigner, your goods transaction is complete, and your use of the dollar you possessed is ended. That is, the only reason anyone accepts a dollar is because of what he imagines he can trade it for. It’s a half complete trade.

PrometheeFeu September 30, 2011 at 1:01 pm

And let’s say the dollar never comes back… Well, then we have gotten something in exchange for nothing. (Well, I suppose a little paper and ink is not nothing, but it’s a pretty good deal in most cases)

vikingvista September 30, 2011 at 1:17 pm

Yep. But realistically, if an American finds value in American, so likely will a foreigner. And a foreigner never would have taken your dollar in the first place he he forsaw the US economy becoming wothless to him. That is, your ability to buy foreign goods is imtimately related to their ability to buy American goods.

There is no doubt that the manipulation of money, as we see with central banks, can have an effect on a economy. But most of what people attribute to the use of currencies in trade is completely irrelevant. What people should focus on, rather, is the productivity of the respective nations. The important question is, do you have something to trade, not what is happening to currencies, or where the trade is going.

House of Cards September 30, 2011 at 5:07 am

“Eliminating that imbalance would create three million to four million jobs, according to Commerce Department estimates, at no cost to the budget.”

Are you saying the Commerce Department is wrong? How do they reach their conclusion and how do you reach yours? We need to get to the bottom of this.

kyle8 September 30, 2011 at 7:12 am

If our manufacturing sector were more efficient and more profitable then we would have many millions more jobs. One easy way to create that scenario would be to drastically slash government regulations. Regulations in hiring, in firing, pro-union regs, extreme environmental regs. various redundant or marginal OSHA and DOT regs. etc.

Cutting corporate taxes would also help.

This would certainly help create jobs, Tariffs will cost jobs as anyone with a rudimentary knowledge of history can see.

Economic Freedom September 30, 2011 at 2:59 pm

If our manufacturing sector were more efficient and more profitable then we would have many millions more jobs.

But they probably wouldn’t be in manufacturing. That’s the essential point you’re missing.

kyle8 September 30, 2011 at 8:17 pm

NO, efficiency may cost jobs, but if you are very efficient then you garner a larger share of the worlds manufacturing and so more jobs, although some would be spin off service jobs.

Economic Freedom October 1, 2011 at 5:27 am

but if you are very efficient then you garner [????] a larger share of the worlds manufacturing and so more jobs, although some would be spin off service jobs.

That makes sense. Thanks.

Economic Freedom October 1, 2011 at 5:30 am

That was supposed to read:

[sarc] That makes sense. Thanks. [sarc]

As in, you don’t make sense.

vikingvista October 1, 2011 at 4:26 am

They might be, just in a different kind of manufacturing.

Fred September 30, 2011 at 8:35 am

Jobs might be created, but at what cost?

Lets say you regularly use some cheap imported product, and the government erects trade barriers to force you to use a more expensive domestic equivalent.
Now you’re spending twice as much for the same thing, and have less money for other things. So you stop eating out since you can no longer afford it.

As others to do the same thing the restaurant goes out of business.
But at least some manufacturing jobs were created.

Speedmaster September 30, 2011 at 6:19 am

>> “C. Fred Bergsten, an assistant Treasury secretary from 1977 to 1981, is director of the Peterson Institute for International Economics.”

Christ that’s scary.

vidyohs September 30, 2011 at 7:14 am

Socialist scripture #1 found in the Book of Mao:
“It is a divine truth that debt can be income.”

Socialist scripture #2 found in the Book of Lennin:
“As long as one comrade has money we all have money.”

Socialist scripture #3 found in the book of nonsense co-authored by Mao and Stalin:
“The plan is more important than the activity.”

Socialist scripture #4 found in the book of Lennin:
“It is just to take other people’s wealth as you would not have them take your own.”

Idiot scripture #1 found through implication in Orwell’s book 1984″
“Advocating the end of welfare is proof one wants welfare to be perpetuated.”

rhhardin September 30, 2011 at 7:49 am

If the Chinese buy Treasuries, their dollars wind up spent but misallocated.

In the absence of this, the Treasury interest rates would rise and discourage political irresponsibility in the US.

Economic Freedom September 30, 2011 at 3:03 pm

I doubt it. Most likely the Treasuries would still be purchased . . . by the Fed. This would be an even greater political irresponsibility.

rhhardin September 30, 2011 at 8:02 am

Those epicycles by the way are a Fourier series expansion for an ellipse, according to Fred Hoyle.

Libt September 30, 2011 at 8:17 am

For muirgeo, the key to prosperity is to set up trade barriers, so if the USA can setup trade barriers, why not take it further, set up trade barriers between states, and between cities in states and between households in cities, clearly he sees the problem with that, yet somehow when it is trade between nations then suddenly it is different wealth cannot be created when it is trading between nations.

JS September 30, 2011 at 8:32 am

To the socialist contributors here:

Your error in reasoning is to think that the economic goal is for everyone to have jobs, and that full employment is a sign of wealth. For one, most of the Chinese jobs, a billion of them, are for substantially below our minimum wage.

If we passed laws forcing us to make all textiles and everything else we imported, those goods would cost so much more that some of the other things we take for granted in society wouldn’t exist. There would have been no savings accumulated to invent and make them. The reversal of the division of labor has huge negative consequences for an economy.

If we had applied your economic reasoning all along, you wouldn’t be expounding your socialist dreams on this website, because the Tech boom never would have happened and none of this would be conceivable.

The consumers, luckily, callously ignore you. They buy where they want to buy and that leads to the maximization of wealth. Even you guys do the same thing. You talk a good game here, but you don’t reward companies selling products overpriced when it comes to your own dollars. Whatever you save, you invest. What you invest gets plowed back into new and better things. You want to reverse this process. You want the government to force you to pay more for things so that you’ll have less to save and so your standard of living will drop. The millions of americans working on providing us with all these things that you take for granted will go to work in sweat shop factories and these products will disappear.

Importing goods is not why we have unemployement. Legislation that hampers an economy is the reason. A government that consumes have of what the productive sector makes us poorer.

If jobs were what mattered, why couldn’t the government just hire everyone? The reason it wouldn’t work is that the jobs would produce nothing to sell. It would be similar to the ‘job sharing’ programs of the 1930′s. If we all shared our existing job with someone who is unemployed, we’d have to share the check with them too. This is essentially what is happening with government. They are growing so big at all levels that half the population, the half that produces things, have to share 50% of their check with the half that does nothing–the government. Certainly, there are government functions that are necessary but the growth of government is due to the ambitions of the people who make a living off of it without their providing equal value to society.

We have minimum wage laws that drive up the unemployemnt rates because we reason that working below those rates is undignified, yet the alternative is that we pay welfare to them. Is that the dignity you’re looking for? You want millions of people out of work being supported in a variety of political ways without contributing anything in return to society. Has it dawned on you guys that supporting people for doing nothing only makes the suituation worse? Has it dawned on you that our society can’t afford to pay every job at the minimum wage rates?

One last question for the liberals. Why doesn’t China have a social safety net? Why don’t Afirican countries, or most of the countries in the world? The reason is that they can’t afford one. If a society can’t afford something, case closed. We have unemployement because we can’t afford to employ everyone at minimum wage, or even close to it. Maybe someday we could, but not if the liberals want to expand government as they do.

The liberals like the concept of force. Why don’t you employ it to make people work, instead of forcing someone to support someone else. A man who works for 5$ an hour has much more dignity than a man who collects it as welfare off the labor of another.

vidyohs September 30, 2011 at 8:42 am

(sarcasm)
Forcing people to work is inhumane, unjust, and unfair. Since the greedy capitalist gets his money from stealing why shouldn’t the poor?

Dignity in doing a job well and taking pride in it regardless of the compensation, oh what a quaint and naive idea. Dignity is in being rich.

Fred September 30, 2011 at 8:42 am

The major problem with trying to reason with socialists is that they do not understand the difference between money and wealth.
They figure that when the government prints money that it is creating wealth. After all, if the government prints $100 and hands it to you, you can go buy something with it. So didn’t the government just create wealth?

ron October 3, 2011 at 8:48 am

JS

The cost of something is only relative to the wealth of a nation. It doesn’t necessarily cost you something more because you buy something inside your own nation because it adds to *your* nation’s economy. It recirculates and increases everyone’s wealth via the currency value. As long as the economy you are in has high paying jobs then high priced goods makes no difference as long as they are relatively of the same value (in terms of purchasing power and wages.)

This has been a sustainable economy for the US for nearly 200 years, up until the 1970s, that has proven its worth as we became the most wealthiest country history has ever known and the highest standard of living. Since our ‘free trade’ has started it’s obvious that our standard of living has decreased significantly. The statistics are there. Or haven’t you noticed that we need two parent families working just to make ends meet? Or just that our middle class is disappearing?

When an economy has borders it’s not socialisistic at all. It’s just plain smart. A country is just a team, or it should be, trying to create the best place to live for all those sharing the same currency. What we can say for sure is that our current position of ‘free trade’ and open economic borders, it’s surely not capitalism we are practicing. Letting other countries be protectionist while we sit back and let all our great technology leave at an alarming rate is just a defeatist attitude. It’s not capitalism it’s defeatism!

Tell me something. What comes of the day when we produce nothing more in this country and other countries now can dictate all the prices within our borders? Will prices really be that low? What then? Will we admit to our mistakes then? Or will we continue to say “what a great way things turned out, by golly.” Will we then say, “wow, we’re not going to pay those high prices.” I think by then our choice won’t be ours, it will be theirs and we will have lost all soverignity in decided our purchasing power.

Sustainability is what I am after. Greenspan has said since at least the early 90s that our trade deficit was unsustainable. What he, apparently, never realized is that it’s sustainable so long as we have wealth to trade. Past that, it’s anyone’s guess where we’ll wind up.

Martin Brock September 30, 2011 at 8:47 am

If someone in China buys land in Texas and puts it to productive use, any contribution to the current account deficit does not fit Bergsten’s model.

How much of the current account surplus does not fit Bergsten’s model?

How much of the current account surplus does not fit Boudreaux’s model?

Tim Singstock September 30, 2011 at 9:11 am

This assumes that the flow of investment dollars into the U.S. is greater than the flow of investment dollars out of the U.S. I read a recent (3-6 mos ago) WSJ article noting a concerning shift in the balance of the flow of capital. More investment dollars were leaving the U.S. than coming back in from abroad. What’s coming in is going primarily into U.S. Treasuries. (http://timsingstock.wordpress.com/2011/07/08/balance-of-trade-and-flow-of-capital/). A trade deficit, not offset by FDI must be a drain on our productivity and wealth.
On the upside, it does remove dollars from circuluation thus increasing the value of those dollars that remain. This dovetails with the idea that trade deficits make consumer products cheaper for Americans.
I hope someone has a resopnse for me on this one.

Don Boudreaux September 30, 2011 at 9:14 am

“This assumes that the flow of investment dollars into the U.S. is greater than the flow of investment dollars out of the U.S.”

Yes. That’s what a current-account – or “trade” – deficit means.

JS September 30, 2011 at 9:47 am

I’m not sure what you mean by FDI.

I don’t think that assuming free trade a trade deficit could possibly be a drain on our productivity. The two aren’t connected.

When we buy Chinese goods, they accumulate dollars and we have less dollars here. Having less dollars here means that domestic prices will come down. This tends to reduce our incentive to import. The dollars accumulating in China are exchanged for Yuan. The exporting entities get Yuan and the Chinese central bank accumulates the dollars. This causes an increase in the Yuan money supply in relation to the goods and services being produced for domestic consumption there, which normally would cause prices to go up.

So, if trade is flowing in only one direction, Chinese prices will go up while our prices are going down, which works to slow down or eventually stop the trade.

I wrote this quickly and am not sure if it is correct. if someone notes a flaw, let me know.

vikingvista September 30, 2011 at 1:39 pm

There was the decades long spread of dollars around the world as the USD became the reserve currency. And there is, I suppose, certain variable amount in lag during trade before the dollars come back to the US. But regarding deflation, you have to keep in mind that through all this, the Federal Reserve was inflating the money supply to prevent the oh so dire deflation you speak of.

The price drops we have seen are more likely the result of productivity increases, which are in turn the result of capital investment, which in turn were fueled in part by trade deficits.

JS September 30, 2011 at 2:44 pm

I agree with you. I was speaking of theory, but thery has been bastardized by monetary policies of all the governments.

The Chinese unload their dollars by buying our debt and ‘sterilize’ their increased money supply by selling bonds to their public. In other words, they remove the additional money from their economy by selling their own debt to their public. Likewise, the global demand for dollars allows us to inflate our supply without suffering the inflationary consequences that would burden us if we weren’t the world’s reserve currency.

From a ‘standard of living’ perspective, we gain and China loses by their not allowing their export policies. This is because their national monetary policies are not designed to maximize the wealth of the masses. In China, prices should be going down for the masses as the division of labor intensifies, but they struggle to prevent prices from rising instead. Why is this?

China is run by an elite oligarchy that owns all the companies, along with many that are state owned, and works hand in hand with the state controlled and owned banks. The elites with the help of the non-free market banks, along with the requisite kickbaks, create huge corporations designed mainly to export goods rather than limit their size to what would satisfy domestic demand. The oligarchy gets rich off the exports and their customers, like us, get rich from having access to such low cost merchandise, but it’s all at the expense of the ordinary Chinese citizens, who benefit, but to a much smaller degree than they would under free market conditions.

The sterilization policies are necessary to prevent wages from rising, which would jeopardize the robbery that the oligarchy and governement perpetrates upon the masses.

It’s very complex, but we are a beneficiary of their centrally managed economy. We help the ruling elite get richer. They need us in order to maintain their hegemony over the Chinese masses, and as a result, they must make it worth our while.

Ironically, it seems that many of us would rather labor for our sustenance than get it below our cost.

JS September 30, 2011 at 2:48 pm

Sorry for the mistakes. I meant that China loses from their export policies-third paragraph.

vikingvista September 30, 2011 at 3:39 pm

Some say Chinese prices are rising because of its rapid economic growth (the “overheated economy” theory). But that is a myopic theory. Sure, there is increased spending in the Chinese economy that drives up demand and therefore prices. But the reason is not too fast economic growth. The reason is the flood of RMB from the central bank as China tries to match the inflationary policies of the Federal Reserve.

True well-coordinated economic growth can never be too fast, and is never a problem (actually, is a wonderful thing). The problem is the discoordinated rapid growth of asset bubbles caused usually by the misallocation and distorted signals of central bank policies.

Sadly, on top of the real growth China has experienced, is a painful bubble waiting to pop.

kyle8 September 30, 2011 at 8:24 pm

I would agree, but I would also warn that most rapid economic growth in history has been in the form of bubbles, and followed by busts.

The kind of high growth we have recently witnessed in China when an agricultural nation rapidly industrializes is a relatively rare thing.

vikingvista September 30, 2011 at 1:31 pm

Dollars spent on Treasuries do wind up in circulation.

The sale of Treasuries may very well be the economy damaging hole in the zero balance of payments accounting (the trade deficit surely is not). But the sale of Treasuries is also entirely a political matter. That is, there is no free market problem in the balance of payments.

SweetLiberty September 30, 2011 at 10:07 am

According to the very liberal Leslie Stahl of the very liberal 60 Minutes, some corporations are parking $60 billion a year in profits overseas to avoid the uncompetitive 35% corporate income tax.

http://www.youtube.com/watch?v=MxgezC4KhXQ

Stahl: “They [the corporations] will tell you they’re forced to do that [keep profits overseas] because a 35% corporate tax rate is high in relation to other countries. And indeed it seems the tax code actually encourages companies to move businesses out of the country.”

Stahl then goes on to interview a Democrat Congressman from Texas who admits that one company that uses Switzerland for a “tax haven” still produces and employs all but six of its people in the U.S., but keeps its profits in Zug which has an corporate tax rate about half that of the U.S.

So, liberals want to force these corporations to pay extortive levels of taxation, whereas libertarians would argue for lowering (or some even to abolish entirely) corporate taxes in order to make the U.S. the most attractive, competitive place for corporations on the planet, giving these businesses every incentive to keep their profits here.

Also, according to Jay Timmons, President and CEO of the National Association of Manufacturers, manufacturing is 18% more expensive here in the U.S. than any place else in the world AFTER you take out the cost of labor. This takes into account our tax policies, our energy policies, our regulator policies, as well as our lawsuit tort policy that is consuming 2% of GDP.

Liberals claim they want more American jobs and to lower the trade deficit, but they refuse to remove governmental barriers which would encourage businesses to increase productivity and profitability. Progressives prefer mafia tactics, and then wonder why fewer and fewer business men and women want to play their game.

vikingvista September 30, 2011 at 1:47 pm

The argument is frequently made that creating a more business attrative political climate in a state or country is good because it draws business away from other places. I would love for governments to use that reason to compete for lower taxes. But it should always be remembered that it isn’t a zero sum game. Lowering taxes does allow wealth to grow, and if all governments simultaneously lowered business taxes by the same amount, all countries would benefit.

Fred September 30, 2011 at 1:51 pm

If tax cuts don’t come with spending cuts the result is deficits and debt.

vikingvista September 30, 2011 at 2:10 pm

Government spending is a terrible distorting problem. But you have to be realistic about the political incentives to spend. If you can maintain a policy of low taxes, thereby driving the government to austerity or bancruptcy, it is probably the only hope for getting any significant cut in government at all.

There is nothing inherent in the inventives of democratic government to encourage fiscal responsibility. We shouldn’t fuel and compound that structural problem by becoming accepting of tax increases of any kind.

Don Lloyd September 30, 2011 at 10:26 am

@JS,

“…So, if trade is flowing in only one direction, Chinese prices will go up while our prices are going down, which works to slow down or eventually stop the trade….”

In practice, the unidirectional export of US dollars to China is very unlikely to overcome the inflationist FED, so that domestic US prices are unlikely to be going down. (Especially with a deflation-phobic FED) On the Chinese side, it seems unlikely that China will allow the prices of export goods to the US to rise to the point where trade is significantly degraded, at least in the medium term.

Regards, Don

JS September 30, 2011 at 3:08 pm

I know.

But the theory still stands and causes governments to use measures to avoid theory from actualizing itself. Please see my post above where I describe the ‘sterlization’ policies utilized by China and the reason why.

My main point is that we benefit from corrupt Chinise statism. We also benefit from the exporting of our own inflation to more corrupt regimes around the world who use us as a reserve currency.

However, despite the enormous benefits that accrue to us, we are still bankrupt as a nation, as is Western Europe. Inflation is the only way out and the brunt of it will be borne by the masses, who because they voted for the profligacy in the first place, deserve what they get.

China is a different story. Many pundits here think of China by only looking at their oligarchy, or government. Although they have a very rich upper class–filthy rich–the masses still live embarrassingly poor compared to us. The question for them is how long can the rich keep exploiting the public? Every one of their policy decisions is calculated on giving the masses as little as they can get away with, short of rebellion. Once the Chinese public gains a measure of political equality, there won’t be much advatage in buying goods from there.

We could be just like China if the liberals had their way. For reasons of justice, we would suspend democracy and the rule of law. We all know that according to liberals, the concept of private property and a rule of law are the biggest detriments to the establishment of an egalitarian society. Once property laws are suspended, the leaders of society will finally have the power to impliment social justice. But wait! With that power they will have second thoughts. Instead, they will decide to enrich themselves–just as they do in China and all the egalitarian societies that subordinate private rights to the common good.

ron October 1, 2011 at 10:58 pm

There are two sides to any economy. One side being the consumer and the other one the producer. Both need each other to exist. When the consumer purchases goods, especially ones that have innovation attached to them, they create jobs and create a situation where an economy can sustain itself. Then a producer creates jobs and the cycle continues. Right now that isn’t the case because of the trade deficit. In the US consumers are supporting producers but producers aren’t supporting the consumer. Something has to give eventually.

Some people claim because one economist says something it’s fact. That’s obviously not true and by Greenspan’s and now Bernanke’s failure to deliver, it’s abundantly clear by real world examples that economics is not a science. It’s barely even an art. Buffett was right about derivatives. How come Greenpan who was by far the world’s leading economist, who set this system up and supported it couldn’t figure it out? Greenspan thought that derivatives would create a system where everyone else would watch each other (counterpary risk exposure) and make sure the counterparty was honest! He also believed that bankers and businessmen would never, ever do anything against their own self interest and destroy an economy for greedy purposes.

Virtually one man’s view nearly wiped out the entire economic system of the entire world in one fell swoop based on nothing more than his opinions of how things should be done. A great economist or a madman?

We must realize that wealth is created by innovation. It’s nothing more than creating a new product or making another one more efficiently. Over time this raises the wealth of all people in any economy (as long as they share the same currency). When I buy a car that’s manufactured wholly in the country I reside it might create debt for me but it can liberate another person from his debt. It creates a sustainable economy as that same person might buy the product that I help manufacture. Who knows, I might even service that company. Have a trade under my belt, or maybe I deliver goods which keeps the doors open longer.

This brings me to another point. The idea that we are going towards a service economy alone means we are going to become a poor economy. Never has their ever been a complete service economy in the past where people had much wealth. When I think of a service economy I think of a resort area. Do they pay much to stand at a counter in a store or to clean a room where the guests have stayed? Do they pay much to clean a car or walk a dog? Show me someone who serves and I’ll show you a person who can barely make ends meet.

We have 300 million people in this country, over 150 million abled workers and how can it be that we’ll all be in service? To each other? When all manufacturing goes then what? By God, you have to stop listening to these theoretical economist. What works in an economy is what has worked and for nearly 200 years what worked was an economy that protected itself from outside competition. Sure, trade can work. But trade alone can only supplement what we can accomplish inside these borders.

There will come a day when we’ll find out what a mistake we made. It hasn’t happened yet in full force but there’s piles of evidence of problems that has occurred in the past 30 years. For one, we have most households where both parents work. We also are losing and have been losing our middleclass at an alarming rate. We were fooled by the bubbles that were created out of desperation to make an economy seem more successful. This was man made and it was created from the top.

Time is running out. The first order of business to solve a problem is you first must realize we have a problem. China didn’t get wealthy by importing its way to where it is now. It did so by an export economy. Thirty years ago they couldn’t even build roads or their own people couldn’t afford the resource of a product. Why now can they do this? They can because they have gathered wealth through consistenty exporting goods to other countries. I make the argument that if a country can become wealthy throught exporting goods, then an importing country can become poor. There’s no other explanation that can be made of this.

Tell me, how can this be otherwise?

Don Lloyd October 1, 2011 at 11:53 pm

You are completely wrong in thinking that an export economy is a good thing. The standard of living is determined by the level of consumption of desired goods and services. By this standard China is a poor country.

Once again, exports are costs, not benefits. Exports are only justified to the extent that they increase the quantity and quality of consumption goods and services and reduce their cost. The necessity of exports comes from the need to keep the keep the foreign holdings of dollars under control so that the dollar price of imports does not run away to the upside. If China had something else to do with the dollars paid for its exports to the US other than buying US exports, the US would be better off not exporting goods that do not themselves serve an efficiency enhancing role for the US production of consumption goods and services.

Regards, Don

Stone Glasgow October 1, 2011 at 11:57 pm

If I sell lemonade to a Canadian, is that bad for me? Bad for the Canadian?

ron October 2, 2011 at 3:37 pm

Don Lloyd,
Though you have a point in that only a poor economy would have to rely on exports in order to promote their economy, there’s no reason to believe that it’s a sign of bad times or an indicator of trouble and we should avoid exporting at all costs. That’s like saying a wealthy man is in a better position to take loans out, and the more loans the better because it’s an indicator of wealth. So someone who borrows $15 million is better off than someone who only borrows $100,000? Afterall, the person who borrows $100,000 must be poorer for sure!!

When we import something, the only reason why another country accept our currency for their goods is because we have assets to back it up (a trade deficit is a temporary loan with assets as collateral). Right now they are satisfied to accept our currency and lend it back to us to create a sense of well being (to keep our currency stable to theirs) because it encourages us to buy up more goods. Eventually, our currency will fall to the point where it’s worthless and countries will no longer accept it. Get it? Then they will go on a shopping spree buying up not our goods, which we don’t make many consumerables anymore, but they’ll buy up our technology, our companies and resources. It will be a firesale.

Do you really think this is an intelligent thing to do? I mean, can anyone think of a dumber act to make? Can anyone not see how stupid foreigners must view our prescription for success?

Surely your head must be so far into books that the real world must seem like a fantasy world to you. Lest we forget that the theoretical basis for unfettered derivatives was to promote counterparty exposure (linked companies) and counterparty checks and balance; we really see where that got us didn’t we? Or are you the one where who still claims that because the theoretical basis of derivatives works on paper then we should continue with them?

Economists are wrong many more times they are right and the above is just one example of them being very, very, very wrong. Many of their theories aren’t backed up by real world examples. When they fail they are considered ‘anamolies’ (check what Greenspan said about the derivative problems of Long Term Capital — which was headed by award winning economists and businessman — in 1998 that almost took down the entire world economy and created an Asian crisis) or are propagandized away as something they are not.

My point is, theories fail more often than not. Why take chances with such an incredibly successful economy? Are we going to get wealthier? The wealthy sure are prospering more. It’s obvious that the present #OccupyWallstreet protests are a result of such idiotic economic ramblings of madmen put into practice.

In order for use to change we must admit we have a problem first. I see that in your case that’s impossible.

Don Lloyd October 2, 2011 at 8:57 pm

@ ron,

“…there’s no reason to believe that it’s a sign of bad times or an indicator of trouble and we should avoid exporting at all costs…”

Those are your words, not mine. The problem is not that exports are large negatives, but that many people believe that more exports and limiting imports would solve all our problems, a total fallacy.

I’m an engineer, not an economist, and I have made no comments about derivatives. There certainly ARE problems and they all originate in Washington, especially involuntary unemployment.

Regards, Don

Appo Agbamu October 26, 2011 at 5:28 pm

GenAppo is a blog that gives insight to our generation on economic issues that will impact us. These decision are being made whether or not we get involved. Lets Reclaim Our Future.

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