Here’s a letter to the Wall Street Journal:
Editor:
After reading Andrew Duehren’s latest piece (“Tariffs Push Up Costs. But Not Always Inflation,” May 19), I plead with you, America’s preeminent financial newspaper, to stop reporting the U.S. “goods deficit.” First of all, this concept has no more economic meaning than would, say, a “things-colored-blue deficit.” There is simply nothing economically special about tangible outputs; a dollar’s worth of tangible outputs has exactly the same value as does a dollar’s worth of intangible outputs – no more and no less.
Second, in the U.S., as in all advanced economies, most GDP is produced by the service sector – specifically, more than three quarters of U.S. GDP is service-sector output. There is thus every reason to expect that we Americans will consistently import more goods than we export and export more services than we import. Reporting, as you do, America’s “goods deficit” creates the false impression that something is amiss on the trade front. And every such impression is seized upon by protectionists to peddle their economic voodoo to voters.
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
