Trade deficits
DEBATE: TRADE DEFICITS ARE BAD
Position Statement: The trade deficit drains money from our economy, lowers our wages and forces us into an ever-lower standard of living.
A trade deficit occurs when the total imports of goods and services are greater than the total exports of goods and services.
The trade deficit not only drains the economy jobs, it sends essential pieces of our industrial ecosystems out of the country. And this means that it is sending our ability to make a living in the future out of the country, too.
Trade deficits lead to a lowering in the value of the dollar compared to other currencies. This raises the costs of imported goods and causes inflation. It leads to more foreign ownership of our assets and companies.
This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. Every dollar of trade deficits makes our country a dollar poorer.
When factories are closed and shipped out of the country people lose their jobs. And the rest of the people are afraid of losing their jobs, so they “keep their heads down.” Companies can make them accept lower wages. They work longer hours. They even stop taking vacations and sick days. They certainly don’t ask for raises or better working conditions, which also hurts the economy. This terrible job fear everyone has helped a few at the top get even richer.
Trade deficits many times are symptoms of some deeper structural weakness in the economy, perhaps reflecting poor public policy.
Cases in which trade deficit represents a problem:
1. Tax and social insurance regimes that discourage saving.
2. Tax systems that favor corporate debt over equity.
3. Banking regulation that encourages excessive lending, via a wide range of policy distortions (deposit insurance, “Too-big-to-fail”, the GSEs in America, tax deductibility of mortgage interest, etc.)
If a trade
Position Statement: The trade deficit drains money from our economy, lowers our wages and forces us into an ever-lower standard of living.
A trade deficit occurs when the total imports of goods and services are greater than the total exports of goods and services.
The trade deficit not only drains the economy jobs, it sends essential pieces of our industrial ecosystems out of the country. And this means that it is sending our ability to make a living in the future out of the country, too.
Trade deficits lead to a lowering in the value of the dollar compared to other currencies. This raises the costs of imported goods and causes inflation. It leads to more foreign ownership of our assets and companies.
This is a real problem that is hurting people, hurting small and mid-sized companies, hurting communities, hurting our tax base and hurting our ability to make a living in the future. Every dollar of trade deficits makes our country a dollar poorer.
When factories are closed and shipped out of the country people lose their jobs. And the rest of the people are afraid of losing their jobs, so they “keep their heads down.” Companies can make them accept lower wages. They work longer hours. They even stop taking vacations and sick days. They certainly don’t ask for raises or better working conditions, which also hurts the economy. This terrible job fear everyone has helped a few at the top get even richer.
Trade deficits many times are symptoms of some deeper structural weakness in the economy, perhaps reflecting poor public policy.
Cases in which trade deficit represents a problem:
1. Tax and social insurance regimes that discourage saving.
2. Tax systems that favor corporate debt over equity.
3. Banking regulation that encourages excessive lending, via a wide range of policy distortions (deposit insurance, “Too-big-to-fail”, the GSEs in America, tax deductibility of mortgage interest, etc.)
If a trade