Tuesday, February 17, 2009
Let the Tail Wag the Dog
I found myself feeling as though I was in the Twilight Zone recently when the government announced that due to the bad economy our international trade deficit for one month was only a record low of 39 billion dollars. Don't look now, folks, but that is pathetic. If we want to get our economic house in order, we should give priority to reducing our international trade deficit and not let it turn out to be whatever happens. The G7 trade ministers are putting pressure on countries not to respond to bad economic times by turning protectionist, i.e. telling their people to buy only their domestic products. They fear that protectionism will reduce the total amount of international trade and lead the world into a downward economic spiral. I have a modified plan to suggest. Let Americans buy anything they want from any country they want, but set a gradually decreasing international trade deficit target, and by law state that the trade deficit cannot exceed the monthly or annual benchmark. Once the difference between imports and exports exceeds that deficit, the only legal way to import more would be to export more. It would help the situation if Americans bought domestic goods, and it would also put pressure on foreign firms and countries to buy U.S. goods if they wanted to be allowed to increase their exports to the U.S.A. It's not protectionism. It's common sense.