Is balance of trade a real problem?
I keep reading where the Chinese are flaying us in trade. Balance of trade deficits keep going up, and the Chicken Littles scream that the sky is falling.
Seems to me balance-of-trade worries are misplaced. Supposedly, we got equal value for what we spent; it's just easier to quantify the dollars we put up than the goods they put up.
Example: Who got more out of the deal when you bought your car? All you got was a car, but the dealer got, say, $40K. Is your balance of trade with the dealer out of whack? Not at all. He got money; you got a car. Fair trade. Both sides got what they wanted at an agreed on price.
Meanwhile, a guy the next town over is selling solar equipment at $40K per average house. He bought a new car from the car dealer, but the car dealer didn't return the favor — he didn't buy solar equipment, even though the cost of solar in that specific town was artificially reduced by government tariff. In the free market, it would go at $45k. This is nice for solar workers in that town, but it puts them out of work in the car dealer's town.
But the real issue isn't tariffs or balances of trade. The real issue is that the car dealer just doesn't like solar, even at special prices. By extant thinking, that's not fair. If solar guy's going to spend money in car dealer's town, then car dealer guy should spend money in his town. Right?
I'm willing to be educated on all this, but in this example, nobody got shafted, and everybody did what he thought was in his own best interest. Balance of trade considerations didn't enter in at all, anywhere, even though the solar guy was "cheating."
Back in the real world, seems to me the Chinese just prefer their own inferior products to our better products. That they tariff our stuff to keep us out means they have to make do with their own clunky, junky stuff. They don't buy our cars, settling instead for Chinese knockoffs. That hurts them, not us.
I'm no economist. Please explain where I'm wrong.
Ad Free / Commenting Login
FOLLOW US ON
Recent Articles
- Democrats in the Wilderness
- A Missing Person’s Alert So Identity-Specific It Stops Being Useful
- Naive Liberals
- Guardians of Liberty: Trump and the Constitution
- Supersizing the Curriculum: The University of Alabama’s Big, Fat Philosophy Class
- Massachusetts vs. the Second Amendment
- Florida Voter Fraud Case Could Overturn U.S. House Race
- Not Your Grandfather’s Foreign Aid
- Christian Morality, Migration, And The Good Samaritan
- Shaken, Not Stirred: The James Bond Complex
Blog Posts
- If Zelensky does not want to negotiate with the U.S., we will negotiate with someone else
- The David that will slay the abortion industry Goliath
- Lemon is Dead
- Could Trump abolish the income tax?
- How not to protest for ‘immigration reform’
- Trump has a point about the 14th
- The Bibas family and the antisemitic moral corruption of the world’s institutions
- It’s official: We live under the most bought-off Congress in history
- Leftist lawyer Benjamin Crump calls for crime to be legalized because it's just part of black culture
- Massachusetts schools teach antisemitism
- The deadliest mass crime wave in American history—who should be held accountable?
- Trump and Hegseth are killing it
- The death of community banks?
- Time for RFK Jr. to hit Big Pharma TV commercials
- Cloward-Piven hits the courts