Here’s a letter to the Wall Street Journal:
Josh Zumbrun reports as newsworthy Jeff Ferry’s warning that America’s trade deficit with China is undercounted because of the exclusion from trade statistics of the value of de minimis imports (“The Tiny Loophole That Understates the Trade Deficit With China,” June 17). These imports are consumer goods brought by travelers into the U.S. in bundles worth less than $800.
Yet rather than suggest that the protectionist Mr. Ferry is justified in raising concerns over the fact that America’s trade deficit with China is larger than is officially reported, Mr. Zumbrun should instead report this fact: In our world of more than two countries, any talk of one country’s trade deficit or surplus with any other individual country is utterly and indisputably nonsensical. When the number of participants in a market is larger than two, there’s simply no reason to expect any pair of participants to sell to each other the same amounts as they buy from each other.
Because you, the Wall Street Journal, buy more (namely, his labor) from Josh Zumbrun than Mr. Zumbrun buys from you, you run what Mr. Ferry would call a trade deficit with Mr. Zumbrum. Yet clearly this fact implies nothing amiss. And so just as there’s no reason to worry that Mr. Zumbrun doesn’t buy from you the same dollar amounts as you buy from him, there’s no reason to worry that the Chinese don’t buy from us Americans the same dollar amounts as we buy from them.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030