Which is best? Trade Deficits or Surpluses?

[dajoga]

Before you answer, consider that we had surpluses in 9 of the 10 years during the Depression and deficits during our current economic boom!

More (http://www.townhall.com/columnists/WalterEWilliams/2007/01/17/trade_deficits_good_or_bad)

[Naturalized-Texan]

American trade deficits are good because they are a sure indication that we are prosperous enough to purchase imported goods, while our trading partners aren't prosperous enough to purchase American-made goods.

EDIT: As evidence, all one has to do is look at unemployment among our trading partners (double-digit unemployment for nearly all of them) and compare it with ours (4.5% = full employment).

[Lazarus]

Well if the question proposes only the two choices, then I dont like the question... Because for the economy to shift heavily to either end is NOT GOOD...

I understand what Tex is saying, but its not that simple... His statement looks good on face value, but when we are importing all our manufactured goods, how does that generate prosperity for American manufacturing? Certainly it means that SOME in America are prosperous enough to buy foreign goods, but if you are a worker in a manufacturing plant that is shut down due to the inability to compete with cheap imports, where is the prosperity...

And no, Im not singing the Union Song - I am dead against unions - have always been - They are nothing but gangs who use the threat of extortion to gain power... Unions have sunk the US automotive industry as well as many other of our industrial segments... Our labor costs have gone skewed way off the chart...

But an America without heavy industry, and America which is dependant on foreign industry, is an America ready to be swallowed up and destroyed... Right now, today, if we were faced with a war of the scale of WW2, we would not survive - not for a year... Save all your rhetoric about how America would "rise to the challenge" - That's great for cheerleaders but the hard reality is, you simply cannot pull a foundry out of your ass and start casting overnight - especially when all your experinced men are gone! Who's going to build the hardware in large supply that a REAL war requires - all these people who have been forced into "service" jobs because "America is becoming a service economy"?

This heavy trade deficit is the prime force that has driven the dollar to such lows against foreign currencies - The dollar is now almost 2 to 1 against the British pound... And there is a school of thought that says that this makes our manufactured goods more attractive to foreign markets... Theoretically this should be so, but in reality its not happening... I work for a major steel producer and foreign exports of our products make up about 1% of our revenue...

The trade deficit issue we face is not a pure economic model in reality, because foreign imports coming into this country are being subsidized by foreign govenments, while our own industrial manufacturing must survive by pure economic factors... Laws have been passed to stop foreign dumping and unfair subsidies, but in reality these laws simply sit idle on the books for display purposes and are not being enforced by our government... Mainly because the ruling elite in Washington like to use trade imbalances as carrots to wield their influence around the globe...

We are in a very dangerous situation... We are dependant on imported oil for our petroleum needs while our own vast reserves in Alaska are being blocked by eco-nazis... Our industrial base has been reduced to a purely nominal existance, leaving us totally dependant and vulnerable to foreign manufacturing... Not only are our physical plants disappearing, but also is our manufacturing knowlege... And our national and personal debt is at an all time high - much of it held by foreign governments that are NOT our friends...

What exactly is healthy about this situation? You dont have to be Milton Freidman to know we are in serious trouble...

[Oldeshooter]

Most of the powerful unions remain under the control of organized crime. Such as Teamsters, Hotel Workers, Dockworkers, etc.

[Naturalized-Texan]

I understand what Tex is saying, but its not that simple... His statement looks good on face value, but when we are importing all our manufactured goods, how does that generate prosperity for American manufacturing? Certainly it means that SOME in America are prosperous enough to buy foreign goods, but if you are a worker in a manufacturing plant that is shut down due to the inability to compete with cheap imports, where is the prosperity...
Nonsense. We are NOT importing all our manufactured goods, not even close.

And no, Im not singing the Union Song - I am dead against unions - have always been - They are nothing but gangs who use the threat of extortion to gain power... Unions have sunk the US automotive industry as well as many other of our industrial segments... Our labor costs have gone skewed way off the chart...
It sure sounds to me that you ARE singing the Union song, because you have swallowed the union propaganda about imports.

But an America without heavy industry, and America which is dependant on foreign industry, is an America ready to be swallowed up and destroyed... Right now, today, if we were faced with a war of the scale of WW2, we would not survive - not for a year... Save all your rhetoric about how America would "rise to the challenge" - That's great for cheerleaders but the hard reality is, you simply cannot pull a foundry out of your ass and start casting overnight - especially when all your experinced men are gone! Who's going to build the hardware in large supply that a REAL war requires - all these people who have been forced into "service" jobs because "America is becoming a service economy"?
All one has to do to see that heavy industry is thriving in the U.S. is to look at manufacturing figures in The World Almanac. American steel production is up dramatically. Domestic industrial income is up from $7.6 trillion in 1999 to $9.97 trillion in 2004 (latest year available). The claim that we are without heavy industry is poppycock.

Naturally, service jobs are thriving and the vast majority of them are very high paying jobs - computer services, medical services, financial services, etc.

This heavy trade deficit is the prime force that has driven the dollar to such lows against foreign currencies - The dollar is now almost 2 to 1 against the British pound... And there is a school of thought that says that this makes our manufactured goods more attractive to foreign markets... Theoretically this should be so, but in reality its not happening... I work for a major steel producer and foreign exports of our products make up about 1% of our revenue...
It's debatable that our trade deficit is driving the dollar lower since there is no balance of payments deficit because our trading partners are ivesting in the U.S.

The trade deficit issue we face is not a pure economic model in reality, because foreign imports coming into this country are being subsidized by foreign govenments, while our own insustrial manufacturing is must survive by pure economic factors... Laws have been passed to stop foreign dumping and unfair subsidies, but in reality these laws simply sit idle on the books for display purposes and are not being enforced by our government... Mainly because the ruling elite in Washington like to use trade imbalances as carrots to wield their influence around the globe...
You don't know it, but you just made the case for free trade agreements.

We are in a very dangerous situation... We are dependant on imported oil for our petroleum needs while our own vast reserves in Alaska are being blocked by eco-nazis...
You finally wrote something with which I agree.

Our industrial base has been reduced to a purely nominal existance, leaving us totally dependant and vulnerable to foreign manufacturing... Not only are our physical plants disappearing, but also is our manufacturing knowlege...
More nonsense.

And our national and personal debt is at an all time high
But not when one balances our debt with our assets. When one does that, our debt is minimal, at worst.

much of it held by foreign governments that are NOT our friends...
I doubt that.

What exactly is healthy about this situation? You dont have to be Milton Freidman to know we are in serious trouble...
Milton Friedman wouldn't agree at all and neither do free-market economists like Walter Williams and Thomas Sowell (see the article linked to in dajoga's post to start this thread).

[PaulRevere]

Firstly, trade deficits are inaccurate if they rely on the government counting goods shipped or trucked across our borders. They don't include royalties, license agreements, and services, of which the US is a great net collector. Hollywood and the music industry alone account for billions in revenues from overseas.

I agree that trade deficits are a sign of economic strength. The falling dollar against world currencies such as the euro, however, is not a good indicator. However, it is counter-intuitive to believe that the Chinese trade surpluses are returning to the US to fund our government deficits are a good thing.

The late Professor Milton Friedman said, "Underlying most arguments against the free market is a lack of belief in freedom itself."
Read "Capitalism and Freedom" by Milton Friedman. He argues that the two are symbiotic and dependent on each other. Any motion to control capitalism is anti-freedom.

[Naturalized-Texan]

Read "Capitalism and Freedom" by Milton Friedman. He argues that the two are symbiotic and dependent on each other. Any motion to control capitalism is anti-freedom.
Read also Free to Choose by Milton and Rose Friedman.

[Trau]

Economic boom? Surely you jest!

[DesertFox]

Huh? The only jester would be the one with a long face, decrying these "hard times" we're in, cuz we're not in hard times. We are in fact in the midst of a long term economic boom.

But then, Trau, you're a liberal. I expect you to go around with a long face and talk about how bad everything is. That's what liberals do without regard for the facts.

[Trau]

I never said this is "hard times". But it sure ain't boomin' times.

[DesertFox]

Yes, it is. The times, they are a-boomin'.

[Naturalized-Texan]

Well, we've had more than 63 consecutive months of robust economic growth and the current unemployment rate is lower than the average unemployment rates in the 1970s, the 1980s, and the 1990s. That is an economic boom by any definition.

[Jag Wife]

Trade deficit/surplus is just part of the equation, like what is the most important part of your car, the engine or the transmission? After all, during Ancient Rome's peak years they had a 100% trade deficit. They imported everything and exported NOTHING.

Trau, you can quit crying now. Marxists, er uh, I mean, Democrats, got the House and the Senate.

[dajoga]

Economic boom? Surely you jest!

Just how would you describe an "economic boom?" When have we had any?

[Etaoin]

Just how would you describe an "economic boom?" When have we had any?

I'm not going to get into illogical, irrational and artificially constructed government figures.........but just point out to this senile citizen where a sound currency was a negative for any nation in history!!! As long as we mentioned history, when was there ever a fiat currency that didn't eventually destroy its nation's economy?

[MrSanity]

Our economy is in the best condition its been in a long time.

[Naturalized-Texan]

We DO have a sound currency that is backed by the full faith and credit of the United States. As long as the money supply continues to be in equilibrium with the demands of a growing economy, the economy will continue to grow and inflation will continue to be low.