Talk:Balance of trade/Archives/2013

favourable trade surpluss
Why is it stated in the second sentence, that a trade surplus is favourable. @DOR My markers where by no means vandalism, but a serious concern. The expression is obviously POV and later in the article this view is stated to be challenged. I try to use wikipedia to find out, why it is said to be favourable, but that is hard to achieve when it is just implied, that it is common sense. --62.235.217.192 (talk) 20:03, 22 April 2010 (UTC)

POV dispute
This article is consistently being edited to convey a point of view that extremely large imbalances of trade are either good or not important. This is a POV that deserves representation, but it should not be put forward as the only POV. Contributions to the article, and posts to this talk page, that attempt to broaden the POV into something more balanced have been answered only by edits to advance an apparent agenda, usually attributed to "microeconomists".Tomcool 18:03, 18 April 2006 (UTC)


 * Please learn some basic economics, I'm not an economist, but the following seems quite obvious and clear tome: the money used to pay for imports has to come back to the country of origin(paying for exports) balancing trade in the long term. If the money does not come back as result of exports, the country that issued the currency is even more lucky, they basically got goods for free! As long as the money is outside the country, that money represents a loan to the country of origin with a 0% interest rate! --Lost Goblin 22:40, 30 October 2006 (UTC)


 * A negative interest rate, because of inflation!! Matthew 22:04 15 January 2011

The trade deficit does not need to be ballanced with anything, pure and simple. Lets say that you sell your neighbor Bob accross the street a clay pot you made yourself. You charge him 20 dollars. After the transaction, are you in debt to Bob? If he does not sell you 20 dollars in wicker baskets back to you, do you have to pay him the 20 dollars back again? Do you have a single financial liability to Bob for the transaction?

Now lets say a national borderline is drawn down your street and he lives in another country. You make the exact same transaction, are you now in any more debt to Bob for selling him the object than you were before? Absolutely not. You already exchanged the utility values and there are no outstanding obligations on either party.


 * You have not even said exactly what revenue would be lost, and why. --Lost Goblin 08:55, 1 November 2006 (UTC)

Not sure this is correct.....

The reason for this is that it is cheaper to buy from other countries where the costs of production are cheaper.

In a country with an advanced economy, primary and secondary industries are likely to be depressed, or uncompetitive. Thus they are restricted to niche and specialist goods. Tertiary industry will likely make a lot of money for the country, and specifically employees of such companies. As the general level of wealth in a country rises, the people will demand more and more goods, and these must be imported to satisfy demand. Thus a negative balance of payments can be generated, but is not necessarily indicative of negative economic activity.

Hi,

On the Dutch Wikipedia I've written a piece of Balance of Trade as well. (OK, I know that there is no such thing as an acknowledged author on Wikipedia, I just happened to be the guy who wrote that text...)

I like this article, but there is one line that may create an incorrect impression. In the second paragraph under "Economic Impact", it says "essentially allowing the United States to expert pieces of paper and get real goods and services in return". Now, I think that we would agree that those "pieces of paper" are, for instance, US Treasury bonds, Treasury bills, and bonds issued by (in this example) American companies. But they being bonds, this means that (a) there is an obligation to make periodical coupon payments to however hold those bonds, and (b) to redeem the pace value of those bonds at maturity, again, to whoever hold those bonds at the maturity date. And I think we also agree that the them holders of those bonds have no obligation to buy refinancing bonds.

The phrase "pieces of paper" seems to suggest (if only by the use of the word "real" when denoting "goods and services") that they are "not real" obligations, and that the issuers of those bonds can, should they choose to do so, decide to wash their hands of the affair, so to speak, and to renege on their obligations. Now, I would be extremely surprised if this were the view held by, for instance, the US government. (And I need hardly state that the mere suggestion that this would be the official view of the American government would send the financial markets in a turmoil that would make a previous financial crises look like a Sunday barbecue!)

I would suggest that whoever looks after this page reconsider this phrase.

I'm looking forward to duscussions on this issue on my user page on the Dutch Wikipedia, or on another convenient location. My username is MartinD.

Regards, Martin

Hey, is anybody ever going to reply to what I wrote here? if not, I'm going to edit it myself.

Regards, Martin

Hi Martin

I think what the original author was trying to say is that paper is a monetary item whereas goods and services are created in the real sector. I agree with you that someone unfamiliar with this economics-speak might interpret the sentence as you describe. It should be changed. mydogategodshat 16:51, 30 Oct 2004 (UTC)

I agree with you. Calling these instruments "cheaply produced paper" is facile. What they are are promissary notes to service debt. Promises made by the current generation that it and future generations will have to honor. When almost all "cheaply bought goods" are rusting in landfills, people will be servicing these debts.Tomcool 21:40, 29 March 2006 (UTC)

Hi Mydogategodshat,

Thank you for your reply. My point simply was that it would be undesirable if people outside of the USA would think that it might be official US policy to default on T-bonds... The phrase "pieces of paper" sounded rather misleading. Regards, Martin

Cheap pieces of paper for goods usually refers to the storage phenomenon, as in China; where the government accumulates the money from exports. If they were to permanently store the money and not send it back into the global market then America would indeed be trading paper for goods.

Reader observation:

What does "Neither is necessarily dangerous in modern economies" mean? Having just read this article this doesn't seem to convey anything meaningful (to me at least). Dangerous to who? The importer or exporter? The world economy? Shared holders? In what, sense not dangerous? What is a 'modern' economy? A contemporary one? A first world one? The phrasing of this article sounds like it's written from the one position rather than setting out and contrasting alternative perspectives. (Though not being an economist I can't tell what.)


 * Just on your comment Martin, the point that is made by "essentially allowing the United States to export pieces of paper and get real goods and services in return" is that if the piece of paper (the dollar bill) does not ever come back to buy an export or in the form of investment, then it is just a meaningless piece of paper, and the country who gave away a piece of paper in return for an export would be happy.


 * Don't be confused, when people say a meaningless piece of paper, they mean an actual note.


 * Matthew 22:11 15 JAN 2011

move stuff to "Reserve currency"?
Since the Wikipedia entitled "Reserve currency" is rather scant, and since the section of this article under the title "Economic Impact of Balance of Trades" deals nicely with the issue, I think that the relevant parts of that section's text should be moved over to "Reserve currency". Then the "Economic Impact.." section could simply link to that article. Any objections? Archie Paulson 01:00, 27 Jan 2005 (UTC)

Macro Vs. Micro
M&Ms here: Im not one to argue over whether an economist considers himself macro or micro but i think with regards this article the opening of the paragraph "Myths" should begin with "Macroeconomists..." and not Micro economists. Also the bulk of Friedmans work has been to address issues at the Macro level of economic enquiry.

The conflict is between those who believe that the state is the salient unit of economics (macro-economic thinking) and those who believe it is firms and individuals (micro-economic thinking). Friedman exists in a strange middle, he believes in the ultimate primacy of micro units but also supports state intervention through monetary policy.

Is this article NPOV?
This article is being slanted toward theories that trade imbalances are neutral or good. Any statement to the otherwise is being modified. We should 1) describe what a trade balance is; 2) explain the mechanics of how a country responds to positive and negative trade balances; 3) outline theories about whether these responses has positive, neutral or negative impacts on economic growth, employment, investment, and so on. History_of_the_United_States_%281980%E2%80%931988%29 has a much more balanced discussion of the economic impacts of government overspending and trade balance. If the contributors of that article can strike an encyclopedic balance, we should be able to in this article. Tomcool 21:40, 29 March 2006 (UTC)

Job loss because of trade deficit?
The article mentions the EPI study that 1.5 million jobs have been lost to China as a result of the trade deficit. However, this particular study makes unverifiable assumptions -- such as imports equate to lost jobs and exports equate to gained jobs. These assumptions are not agreed upon by all economists and I think the report should not be presented as fact (as it seems to be now), and instead it should be presented as a point of view.

I think this problem can be resolved by adding in the proviso "all else equal": As in, "The relationship between trade deficits in manufactured goods and manufacturing employment seems obvious: imports decrease labor demand in manufacturing while exports spur this demand. A rising trade deficit means, all else equal, that labor demand in U.S. manufacturing is reduced." 


 * Good point. The only way "job losses [sic] to China" can be considered negative is if one assumes there is a greater value to a job somewhere outside China than there is to one inside China. Since that would be blatantly racist (OK, OK, bias), there isn't a shred of support for such a notion. DOR (HK) (talk) 02:32, 3 June 2010 (UTC)

NPOV example
"Most economists do not believe that trade deficits are inherently good or bad; some even believe they should be ignored entirely"

charged statement under "dissenting opinion about trade deficits" that also lacks citations. violates NPOV. perhaps "most" should be changed to "some"? one example of the NPOV violation, I'm sure there are others. PMoney 09:18, 19 June 2006 (UTC)

I changed the tag to POV-check in hopes to revive the NPOV discussion. I think I may add the Long NPOV tag as well, but I'm not sure if it is necessary. PMoney 09:24, 19 June 2006 (UTC)


 * I have reverted some vandalism, but i agreed with some of the deletions.--Daanschr 17:52, 1 August 2006 (UTC)


 * I'm going to disagree with this edit. While wealthy, aging economies may need to keep their trade close to balance, emerging economies tend to do better with an appropriately driven trade deficit. Appropriately driven includes import of capital equipment to produce export products, as happened in the case of the NICs. So, perhaps the phrase should be "Developmental economists do not believe that trade deficits are inherently good or bad; some even believe they should be ignored entirely." DOR (HK) (talk) 02:37, 3 June 2010 (UTC)

Trade Surplus?
There are tons of information on trade deficit, but what about trade surpluses? Can someone who know more about this issue please add a section to this page? Especially since there's a "America's trade deficit" section I think it would improve the overall NPOV to have a counter example, ie: "China's trade surplus". Yongke 21:07, 12 February 2007 (UTC)


 * I agree, this would improve the article. It's what I came here looking for, actually. MMad (talk) 08:24, 4 March 2008 (UTC)

Friedman Critic Paraphrase
Does anyone else view "Critics claim that Friedman's argument is equivalent to saying that it doesn't matter if you get indebted, because eventually you will have to pay the money back. The obvious counterargument is that once a significant debt has been accumulated, paying it back may be painful." as way too simplistic?

I don't agree with the critics, but still, it doesn't seem right to make them look foolish; there are sensible arguments against Friedman--this is not one of them. I know of no critic who, having read Friedman's argument, would summarize his argument as "eventually you will have to pay it back;" if said critic had, then it would be clear that he/she did not understand Friedman's argument and would lead me to question whether they deserved the title critic and perhaps not econ novice. Sheridp 00:29, 5 September 2007 (UTC)

Also, "A potential difficulty however is that currency markets in the real world are far from completely free, with government and central banks being major players, and this is unlikely to change within the foreseeable future." How does the fact that government and central banks being major players have anything to do with it being a free market. As long as governments don't fix exchange rates--and in general they do not else they would be subject to plundering arbitrageurs--and prices fluctuate--and they do, heard of forex markets?--then its a free market.

I'm not going to cause an edit war by making these changes, but if anyone agrees with me, please do. Sheridp 00:51, 5 September 2007 (UTC)


 * AlGore won a Nobel Price too, so what. "...a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy" I thought anarcho-capitalists didn't believe in the zero-sum game.  Hypocrites and liars.68.106.248.211 09:17, 1 December 2007 (UTC)

Friedman's views should be taken in context of the times. The Reagan Administration sought a higher valued dollar as a cure for the high inflation of the late 1970s and early 1980s which resulted in cheaper imports and higher trade deficits. Economists do not necesarily continue to recommend the same set of policies when circumstances change. Its not fair to Friedman or any economist to cite them as a permanent defender of a certain policy. Thomas Paine1776 (talk) 16:20, 17 April 2009 (UTC)

Changed US Defecit Graph
The article mentions that the last year the US had a surplus was 1991, even though the last year the US had a surplus was 1973. I also made a new graph using information from the US census and information from a government website. The article includes information saying that a recession, or decrease in economic activity actually decreases the trade deficit, so created a graph that showed that information. All information is sourced on the description of the information itself. —Preceding unsigned comment added by Strawgate (talk • contribs) 06:21, 27 February 2008 (UTC)

Pro/Against balance of trade?
The "Economic Impact" section seems to have been written for an article about trade deficit, since it starts with "Modern economists are split on the economic impact of the trade deficit..." and then lists Pro and Against arguments. This looks odd if you read the Contents box at the beginning of the article, since it reads like arguments for or against a Balance of trade (since this is what the article is about) which doesn't really make sense. MMad (talk) 08:30, 4 March 2008 (UTC)

I am new to editing in Wikipedia. But the scale on the vertical axis is in Trillions. USA's entire GDP for 2008 was just over 14 trillion. According to http://flagcounter.com/factbook/us the us current account balance for 2008 was -568 Billion. —Preceding unsigned comment added by Pbechard (talk • contribs) 01:12, 5 April 2009 (UTC)

The section is more appropriately phrased 'Conditions where trade deficits may be considered harmful' and 'Conditions where trade deficits may not be considered harmful'. Economists may differ on the status of economic conditions.Thomas Paine1776 (talk) 16:25, 17 April 2009 (UTC)

Internationality
The current article was written from a strongly US perspective: Balance of Trade never discusses a Trade Surplus! Can someone tag this appropriately? Thanks!--66.65.125.206 (talk) 21:14, 11 April 2008 (UTC)

I also want to add that this article mostly seems to discuss whether the US has a problem with their balance of trade, which is a discussion which I feel belongs either in a separate section, or on a different page. Wikipedia is an international encyclopedia, and national discussions should be avoided, or placed elsewhere. Marco devillers (talk) 21:21, 20 November 2011 (UTC)

Good information???
'''Strong growth economies such as the United States, Australia and Hong Kong run consistent trade deficits, as do poorer growing economies (where heavy investment fuels growth and the trade deficit).

Mature but stagnant economies such as Canada, Japan, and Germany typically run trade surpluses. China also has a trade surplus[citation needed]. A higher savings rate generally corresponds with a trade surplus. Correspondingly, the United States with its negative savings rate consistently has high trade deficits.'''

Is Australia realy a "strong growth" economy while Canada is a stagnant economy? I am not an economist, but I don't believe this. Also, I consider that the US economy is "mature" enought, and I tought that Hong Kong has a trade surplus (but I can't verify this it's not on wikipedia for some reasons). Can someone explain this? —Preceding unsigned comment added by Zorxd (talk • contribs) 15:02, 12 February 2009 (UTC)

Agree, reworded this. Someone has inserted inaccurate/pov statements.Thomas Paine1776 (talk) 16:26, 17 April 2009 (UTC)


 * The last time Hong Kong had a merchandise trade surplus was 1989, and that was one of only 4 surplus years in the past four decades (maybe longer; no further data available). DOR (HK) (talk) 02:45, 3 June 2010 (UTC)

US trade surplus with Canada?
Not according to this: http://www.bizjournals.com/buffalo/stories/2003/06/30/story1.html However, it's old. Does anyone have a more recent reference? --zorxd (talk) 16:38, 11 June 2009 (UTC)


 * The US last had a trade surplus with Canada in the second quarter of 1981, but this data (http://www.census.gov/foreign-trade/balance/c1220.html) only goes back to 1985. DOR (HK) (talk) 08:27, 28 August 2009 (UTC)

Canada still has a trade surplus with the United States as of January 2010: http://www.vancouversun.com/business/Canada+posts+surprise+trade+deficit+November/2433118/story.html Spock35 (talk) 21:33, 14 February 2010 (UTC)

Deficits
I rewrote the section on some deficits not being harmful. DOR (HK) (talk) 08:27, 28 August 2009 (UTC)

Authors Don't Understand Basic Economics
"More complexly, ... a capital account surplus often off-sets a current-account deficit."

The capital account surplus is the opposite of the current account deficit by definition.

71.178.122.109 (talk) 15:35, 15 November 2009 (UTC)
 * Which is exactly what the sentence means . . . DOR (HK) (talk) 04:14, 16 November 2009 (UTC)

That is not the "exact" meaning. The sentence contrasts poor economies with rapidly developing economies:

"in rapidly developing economies a capital account surplus often off-sets a current-account deficit."

This is misstated because in ALL economies the capital account is ALWAYS the exact opposite of the current account. This article needs to use economics textbooks. 71.191.111.234 (talk) 16:42, 16 November 2009 (UTC)

Yeah, except not all rapidly developing economies have a capital account surplus. DOR (HK) (talk) 05:04, 7 February 2010 (UTC)

I think you miss the point - the terms trade account surplus means spending less than you earn. As opposed to a deficit which is spending less than you earn. What I think you mean is a current account in credit and no debt, otherwise the sentence is analagous to "Turning the steering wheel to the left often sets the wheel of turning right" - i.e. that the two are mutually exclusive but one or other is always true, therefore the end of one state logically assumes the beginning of the other.Calorus (talk) 03:51, 26 September 2010 (UTC)

New concern
Aside from the weasel words, this statement seems to assume that a trade deficit is caused by a rise in imports replacing local products (and, hence, taxpayers) rather than any of the myriad of other causes. I recommend it for deletion:

Some economists believe that GDP and employment can be dragged down by an over-large deficit over the long run.[11][12] The opportunity cost of a forgone tax base may outweigh perceived gains, especially where artificial currency pegs and manipulations are present to distort trade.[13] DOR (HK) (talk) 05:04, 7 February 2010 (UTC)

62.235.217.192, please register and / or log in if you wish to discuss changes to this article on my Talk page. DOR (HK) (talk) 00:42, 23 April 2010 (UTC)


 * "Says who" is neither grammatical nor useful in understanding why you are changing the text. DOR (HK) (talk) 02:13, 26 April 2010 (UTC)


 * I'm not sure which tag to use. But stating that it favourable to have a surplus is clearly POV, even it is a majority opinion. --62.235.239.183 (talk) 16:04, 26 April 2010 (UTC)


 * OK, call it "more sustainable." DOR (HK) (talk) 09:44, 27 April 2010 (UTC)

Authors don't understand the meaning of the word "problematic"
It doesn't mean "a problem", it means "doubtful". —Preceding unsigned comment added by 83.244.221.116 (talk) 10:16, 5 May 2010 (UTC)

US centric page?
The entire "Views on economic impact" appears to deal only with the US deficit. 188.221.161.189 (talk) 03:42, 1 June 2010 (UTC)

Views on economic impact
The caption of the US international investment position graph shows a bias against outsourcing, and is not representative of “concern among economists.” Moreover, the sources (Economic Policy Institute) in quite protectionist. Finally, this is an article about trade, not investment. Recommend deleting the graph. DOR (HK) (talk) 02:04, 31 August 2010 (UTC)


 * Done. 10 weeks seems like long enough to raise objections. DOR (HK) (talk) 03:04, 14 November 2010 (UTC)

"Clarity" ?
Marshall46 recently added a "clarity" tag to the word "several," in reference to "several percent of GDP." Since there is no consensus as to exactly how many percent of GDP might be a problem, the word "several" is entirely appropriate. I've refrained from revertion to allow some discussion. DOR (HK) (talk) 03:01, 14 November 2010 (UTC)

Friedman comments
Friedman has never said anything like "Friedman and other economists have pointed out that a large trade deficit (importation of goods) signals that the country's currency is strong and desirable." or "To Friedman, a trade deficit simply meant that consumers had opportunity to purchase and enjoy more goods at lower prices; conversely, a trade surplus implied that a country was exporting goods its own citizens did not get to consume or enjoy, while paying high prices for the goods they actually received." These are in direct conflict with earlier comments "Prof. Friedman argued that trade deficits are not necessarily important as high exports raise the value of the currency, reducing aforementioned exports, and vice versa for imports, thus naturally removing trade deficits not due to investment. Milton Friedman's son, David D. Friedman, shares this view and cites the comparative advantage concepts of David Ricardo." which is cited. I am removing that paragraph.

The comments from Charlie Rose are correct. He begins talking about this at about 3:00 here: http://www.youtube.com/watch?v=nPHs9Ln8QT8 —Preceding unsigned comment added by 75.66.100.92 (talk) 17:14, 7 December 2010 (UTC)

POV dispute, follow up...
Hello All

I am not an economist, but business admin. Still these are international economics 101´s questions. I can’t believe that no one with the right credential has answered the questions below. I believe these are matters that worry a lot of people on a daily basis, and it is clear that there are a _LOT_ of misunderstandings.

First, yes, the trade balance needs to be balanced, but it s not something we will have to balance later... In other words, the balance of payments is always balanced to zero. The question is not how are we going to balance it, but if its OK the way it is balanced today. Let’s take Bob’s example below, which has serious flaws. First, we are the buying part, not the selling part, so the question is: From where did we get the 20 dollars to pay for the pot? It is clear that Bob´s household has a 20 dollar deficit. He might need to get into debt to pay for the pot. If that is the case, it would not be good.

Second, these are international economics; there are different currencies in the example. Let’s say that we are buying a pot from someone in China. Chinese pot makers do not want dollars. They might save some, but at the end they pay their employees and suppliers in yens. This is true for all imports. When you buy a BMW it needs to be paid in German Marks. So, between Bob and China there is a bank doing the transaction AND a currency exchange. A bank or exchange buys currency from people and sells it out to other people needing that currency, for a small profit.

The Problem is the exchange rate. As the exchange needs more yens than dollars, because of US people buying lots of Chinese stuff and not selling anything to china, it needs to devaluate the dollar, or it will run out of yens. So yes, the trade deficit needs to be balanced and it needs to be balanced immediately by devaluating the currency, meaning taking more dollars per yen, or by the government selling some Yens from the reserve, or by getting into debt with China. This doesn’t look good either…

… and here is the confusion. Most people get here and believe we are just selling away the country in debts. Actually, we are not selling reserve or getting in to debt to pay for the deficit. At least not in the forms mentioned. In reality things are a little bit more complicated ->

We are forgetting that a country´s balance of payments does not only consider the balance of trade, it also includes the capital / financial accounts (see the corresponding wiki articles). These accounts are another mean of receiving foreign currency, but in the form of investment, not trade. The balance of trade, or the current trade deficit, is balanced, among other things, with the capital/ financial accounts, for which we have a huge surplus. Otherwise we would have run out of foreign currency long time ago. This is the why the dollar, and U.S. in general, floats in the world, and it works very well since the dollar is still considered a safe currency, and, until the EURO, it was considered the safest in the world.

So, returning to the example: In actuality, for Bob to buy a Chinese pot he would normally go with a trading company, which would sign a contact with Bob and the manufacturer. They would receive Bob´s money, make the exchange, receive the pot and pay the Chinese manufacturer… again, for a small profit.

Problem remains: Bob is 20 dollars short in his balance of payments, but, unbeknown to everyone, Bob just invented something. Whatever, it does not matter. He might get rich or he might not, again, it does not matter. The important thing is that a Chinese investor just bought 20 dollars of Bob company´s stock in AmeriTrade, or whatever exchange. This is also recorded in the balance of payments, but it is positive, and Bob is balanced without needing to get into any liability. In other words, Bob is an inventor that sells ideas, not a worker of the line getting paid a wage or for productivity.

Ok, this is what’s happening, no interpretations. Now I will permit myself to present you what I think.

It is clear that a lot of people believe that a country is just like a shop, where you are as rich as the balance of what it is sold vs. what you buy. This is just not the case. First, in the US, as in almost any country, foreign trade is no more that 1/4 of the GDP. In other words, most of the stuff made and sold in the US is traded inside, so our measure of well-being should not focus on a current account balance.

Secondly, a lot of people, especially from other countries with socialist inclinations, do not understand how the stock market works. Especially since socialist literature is against private property in the first place, let alone trading it. The reality is that modern economics, at least for developed capitalist’s countries, has moved so far beyond the original teachings of Marx and Smith that we fail to see many factors that now play a very important part.

I believe that the most important thing that we need to understand is the role of innovation, entrepreneurship and investment (speculation). Returning to the discussion below, the comment about other countries buying green paper is actually a quote of Friedman while trying to explain all these stuff. What he meant is that foreign investors send money to the US for nothing physical. Even more, they might not get anything in return. Marx would turn on his grave if he heard that. Not only do we steal from the proletariat but we trade the bounty. In reality it turns out that speculation / Investment is the way in which any Joe Schmoe can come up with an idea and have the resources to make it work. By investing, a capitalist or investor is putting into motion a Darwinian machine that will select the next generation of products and kill the obsolete ones.

Ideas cannot be planed, or scheduled. The government can’t hire a bunch of people and ask them to invent the internet, the computer or the iPod. They just happened and, so far, the best way to get resources for ideas is by “selling” the ideas. An investor buys a promise that might not be fulfilled and, in that case, means no liability to the inventor. If the idea works, you pay for the manufacture of whatever the thing was and the royalties that corresponds to the person who invented the thing, and to the investors who ran the risk of losing their money, but believed the inventor. Little does the man in the manufacturing line has to do with all these.

So now we can understand the debate about the deficit. First, the US is not a manufacturing country; we innovate and create things: the computer, the airplane, the ipod. We need to understand that the money is not only in the making of the thing, but in selling the idea, and having an idea is better than having a factory. So, our financial surplus is a legitimate way to balance the deficit. This is also why the Dow is a common health indicator of the US economy.

So, what does this rubbish mean? Do we all need to be Steve Jobs? Can’t we have a regular JOB ? Do I need to go to CHINA to find regular work? Actually not. There’s a lot of work in high tech companies and we do need to produce some stuff locally. The future is not what Marx saw of thousands of workers in factories. The future is now in the US and JAPAN. Look at Toyota, at IBM, do you see people in the line? No either it is all knowledge work or robots are making the physical things. The future is for educated people working ideas in huge companies. Already in the US more than 50% of the population work in administration related jobs. What’s the place of the aged, uneducated, sick or lazy ? … good question.

In the other hand, just from observation of the data, as incredible as it might sound, the deficit tends to shrink during bad times, and expand during bull times. Even more, there is documentation that the deficit is proportional to employment. See http://www.cato.org/testimony/ct-dg081999.html. Now we can understand. The trade deficit happens as we do well, and have more money, and we like to buy foreign things, say, look at your BMW. The problem is that we do not sell so much to Germany, like in the case of your BMW, but it might not be an issue, since Investors from all over the word are still buying our stocks.

Now, this last part is so new, nobody knows if we can keep like this for ever, or whether in actuality the deficit is a good thing. I hope someone with the right credential could comment. I wonder if Mr Friedman looks at the Wikipedia…

--ALEVP (talk) 23:35, 11 March 2010 (UTC)

ALEVP, thanks for sharing your POV. I fully respect your opinion that balanced trade is better than unbalanced, but let’s not confuse such a personal POV with developmental economics or international trade. If such were the case, the Asian Economic Miracle would have never taken place (Japan and the Newly industrialized country all ran trade deficits for long periods before turning to surplus). As for your comment, “it needs to be balanced immediately,” it seems you have some specific economy in mind, which might be more appropriate for The Economy of Country X’s discussion page, rather than here. DOR (HK) (talk) 02:00, 3 June 2010 (UTC)