For nearly 20 years, Sheldon Richman has been patronizing the same tobacco shop. Recently, "it struck me that my trade deficit with him is astronomical," Richman writes.
This is also the case with Kroger, Walmart, McDonald's, and a variety of gas stations. See the pattern? The money moves in one direction only. What the hell is going on?
Of course, imbalances of this sort aren't actually a problem. And most Americans understand that at the micro level: getting goods we want or need in exchange for cash doesn't mean we're getting a raw deal. Yet when it comes to U.S. trade with other countries, many harbor a dangerous deficit of understanding, believing that Americans lose when we buy more from a particular country than we export to it.
As with personal exchanges, however, we shouldn't care about any bilateral "deficit," writes Richman. What matters is that we don't chronically spend more money than is coming in.
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