Tuesday, May 04, 2010

Trade deficits- not just irrelevant, but completely imaginary

Trade deficits- not just irrelevant, but completely imaginary

I was once again watching John Stossel's show. This latest episode was on "free trade", and talked a lot about the myth of "trade deficits" being a bad thing. Yet, the show missed the biggest, and (to me) most obvious point.

Stossel was very good at defending free trade, and exposed Lou Dobbs as a source of a lot of hot air without a foundation. But, one thing Stossel didn't point out is that there can be no such thing as a "trade deficit". Maybe he has bought into the myth, just a little, himself. Maybe he hasn't thought this through, yet. The truth is there can be trade, or there can be theft. The component that makes the distinction, by its presence or absence, is coercion.

The example that is much overused in regard to "trade deficits" is China. Chinese manufacturers make stuff, cheap, and sell it to customers in America. And we customers pay them for it. No one forces us to buy any one thing in particular. Even government has so far failed in this area. When we give a Chinese manufacturer dollars, we have made an even trade. Dollars for products. There is no deficit. Unless a government or mugger gets involved and takes your property (products or dollars) and gives nothing (or too little) in return, the trade is always an even one.

That is, unless you claim that the money traded for the products is worth more than the product you got in return, in which case you are an idiot to agree to the trade. Personally, as an individual. Or unless you wish to admit that US dollars are worthless (or worth-less), in which case the Chinese company got ripped off, not you. You have no authority, nor enough wisdom, to judge another person's trade. What makes sense to them may seem one-sided to you. That is not for you to judge.

If you are mad that "PlastiCrap World" sells cheap Chinese products, don't buy them. Pay more and get a better item instead, either from the same store or from a competitor. Or get what you want from a yard sale or flea market. Or design and build your own. I do all the above, and so can you. Plus, sometimes I buy the "cheap junk" because it suits my needs at the price I am willing to pay at the time. Once again: voluntary trade; no deficit.

The whole myth of "trade deficits" is just an excuse to tell you who you can trade with, and under what conditions. It also always funnels some money into thieving governmental hands. This myth is an authoritarian power-grab and is bad for liberty and good for coercive government.

Albuquerque "Public" Schools (government indoctrination camps) superintendent Brooks warns students that they can only voice their opinions as long as they do so in a way he approves (and he doesn't have to listen), and reminds them that they are prisoners and can't leave just because they want to. Of course, he uses more dishonest words to say this, but the meaning is clear.

Education is much too important to leave to government and self-serving bureaucrats like Brooks. Separate school and state.