Reversing Trade Deficit Could Make America Less Great

New York Times: “Donald Trump believes that a half-trillion-dollar trade deficit with the rest of the world makes the United States a loser and countries with trade surpluses like China and Mexico winners.”

“The reality is different. Trade deficits are not inherently good or bad; they can be either, depending on circumstances. The trade deficit is not a scorecard.”

“What’s more, eliminating the trade deficit would not, on its own, make America great again, as Mr. Trump promises. And in isolation, the fact that the United States has a trade deficit does not prove that trade agreements are bad for Americans, a staple of Bernie Sanders’s campaign in the Democratic presidential primary. In fact, trying to eliminate the trade deficit could mean giving up some of the key levers of power that allow the United States to get its way in international politics.”

“Getting rid of the trade deficit could very well make America less great. The reasons have to do with the global reserve currency, economic diplomacy and something called the Triffin dilemma.”

15 Comments

  1. I wish we could make this required reading for all the supporters of both Trump and Sanders who have ridiculously over-simplistic views of trade. Granted, it benefits both candidates to arouse voters with with simple solutions to superficially defined problems, but such maneuvers only work with an ill-informed electorate.

    1. That’s how populist campaigns work.

      “You shall not crucify mankind on a cross of gold”–William Jennings Bryan.

      “Every man a king”–Huey Long.

      You engage strong emotions to sway votes, promise optimal results if you win, threaten dire consequences if you lose. It works, sometimes. But then what?

      I don’t mind Bernie getting people worked up in a good cause, but how does he plan to get anything done? He can’t explain how he’s paying for any of this, let alone how he’d pass it through congress.

      I honestly think he’s more of a populist than a socialist at this point. And that’s precisely why there’s this weird overlap between his and Trump’s base of support. And that is worrisome.

      1. The Bern is a lot of smoke and mirrors – can’t get any of his lofty promises through any Congress, Republican or Democrat. A later day version of the McCathy “children crusade” and the McGovern debacle. The dreamy, idealistic left pulls one of these games every generation and sets back the working class (that’s most of us) for a decade with more right wing government. Some people just never grow up – whether they are 20, 30, 50 or 80.

        1. People talk about FDR, and have no idea who he really was. He’s a hero of mine too, but I don’t view him through rose-colored glasses. He was a cold calculating SOB, who triangulated like hell when he had to. And he wasn’t trying to bring about socialism–he was trying to head it off by reforming capltalism.

          People watch too many movies, and don’t read enough history. They want the romance. If you want romance, stay the hell out of politics.

          1. I am afraid to many agree with HENRY ford’s assessment that “history is bunk”. Any surprise we are in the goofy situation of today’s politics.

          2. We dropped the ball too many times–now we’re in a situation where if we lose, we lose everything.

        2. I am not a Senator Sanders supporter, although who knows whom I will have to choose from in November. With that said, Senator Sanders has made several key points which you seem to be unaware of:

          1. His political revolution will only work IF his supporters help change congress. (I take this to mean flip the senate/narrow the house Republican Majority)

          2. His tax on financial transactions, which was one time used actually would help pay for his college tuition plan, and i suspect it will also help decrease the amount of “Churning” on wall street.

          1. 1)Look at the majority Obama got in 2008–he was just barely able to pass the ACA, and had to compromise a hell of a lot to get there (and it’s working). Obama is a far more effective political leader than Sanders ever could be. Young people showed up in much greater numbers to vote for him than they are now for Sanders. There is no revolution going on here. Not in the Democratic party, anyhow. And do we really envy the Republicans for the chaos ripping their party apart? Not that they don’t deserve it. But if both parties fell to pieces at the same time, what would happen to the country?

            2)I’m fine with the financial transactions tax, and if it was used to pay for college tuition, that would be a fine thing. However, he’s calling for much more than that, and to pass all those laws and all those tax increases–couldn’t work. Not politically, not economically. He hasn’t gone into enough detail to explain how it could be done. He doesn’t have a good enough grasp of the numbers.

            Obviously I’d vote for him, but with a certain sense of doom. I don’t believe he’s got what it takes. Being a good man and a good leader are not the same thing. Sanders has been on the outside so long, he doesn’t even know what the inside looks like. And you have to. FDR did.

            Hillary will win the nomination. Sanders can’t change that. All he can do is create chaos at the convention, if he won’t give up his quest. And that could mean Trump or Cruz–Kasich would be bad enough. ANY of them would be bad enough. We can’t afford to go back now. We need a third term, more than we need a lot of empty proposals. And we need somebody with the skills to make real lasting change. Sanders has never accomplished much of anything. He doesn’t know how.

        3. I am not a Senator Sanders supporter, although who knows whom I will have to choose from in November. With that said, Senator Sanders has made several key points which you seem to be unaware of:

          1. His political revolution will only work IF his supporters help change congress. (I take this to mean flip the senate/narrow the house Republican Majority)

          2. His tax on financial transactions, which was one time used actually would help pay for his college tuition plan, and i suspect it will also help decrease the amount of “Churning” on wall street.

        1. If he never said anything when he was sober, his collected utterances would occupy a very slender volume.

    2. Fee trade benefits the overall world economy, but it has many country-specific negative impacts that vary depending on the existing economy within a particular country. This article, like many of those used throughout the years to support bilateral and multilateral treaties that are trade-related, focuses on the overall benefits of free trade while minimizing negative country-specific impacts. In that sense, it is no less “over-simplistic” than many of the statements made by candidates.

  2. The bottom line is we can’t continue with 500 billion dollar annual trade deficit.

    “Trying to eliminate the trade deficit could mean giving up some of the key levers of power that allow the United States to get its way in international politics”

    Hog wash, We use to have trade surplus’s and had plenty of power. What are deficit is doing is letting countries like China to mass a huge military and gain stronger levers of power.

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