Quote:
Originally Posted by PaceAdvantage
Trade deficits are good.
Always remember this line folks, and praise those who say it.
(Yes I'm being sarcastic)
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What's bad about trade deficits? They give American consumers more buying choices and lower prices. They increase the purchasing power of Americans. Contrary to conventional wisdom, they do not kill off huge numbers of manufacturing jobs.
The other side of that coin is that when we have a trade deficit, we have a capital surplus. That means that foreigners are investing more money in this country than we are investing in other countries. That creates jobs and wealth here. Investments like Toyota and Mercedes and BMW building plants here.
And in spite of all the horror stories about deficits coming out of the White House, Americans still produce 72.5% of the steel we use. And China produces 3% of the 27.5% that we import.
So why are trade surpluses, the opposite of deficits, such a good thing? A place to start might be to look back at the 1930s. We had big trade surpluses in that decade.