Again: Don't be Confused by Statistical Artifacts
7 September 2006
The Editor, USA Today
To the Editor:
You correctly argue that if the Chinese spend more money vacationing in the United States, "that could help clip the $202 billion trade deficit with China" ("China's latest exports: tourists - and lots of them," Sept. 6). But why assume that this result is desirable?
We praise Americans who don't blow all their incomes on current consumption - that is, Americans who save - and who invest these saved funds. So shouldn't we also praise those Chinese who, rather than rushing to buy as many consumption goods and services as possible, save and invest a portion of their dollars? That such investment by foreigners creates the statistical artifact we call a "trade deficit" does nothing to make such investment less important than domestic saving and investment to the vibrancy of our economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
The Editor, USA Today
To the Editor:
You correctly argue that if the Chinese spend more money vacationing in the United States, "that could help clip the $202 billion trade deficit with China" ("China's latest exports: tourists - and lots of them," Sept. 6). But why assume that this result is desirable?
We praise Americans who don't blow all their incomes on current consumption - that is, Americans who save - and who invest these saved funds. So shouldn't we also praise those Chinese who, rather than rushing to buy as many consumption goods and services as possible, save and invest a portion of their dollars? That such investment by foreigners creates the statistical artifact we call a "trade deficit" does nothing to make such investment less important than domestic saving and investment to the vibrancy of our economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Saturday May 19, 2007 at 12:22pm