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Posted By Don Boudreaux On October 15, 2011 @ 1:13 pm In Balance of Payments,Myths and Fallacies,Trade | Comments Disabled
Here’s another letter to The Nation:
Thomas Geoghegan writes that “Of course no country should run a trade deficit. That’s common sense” (“What Would Keynes Do? ” Sept. 27).
Let’s translate the first sentence into terms more revealing: “Of course no country should ever have a net inflow of capital.”
Appending “That’s common sense” to this translation of Mr. Geoghegan’s sentence seems, well, to contradict common sense.
Thundering against trade deficits is a shoddy and easy means of rousing the economically illiterate to support destructive protectionist policies. But such histrionics remain very bad economics.
Donald J. Boudreaux
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