Wrong Direction
14 January 2009
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Reporting on the recent fall in America's trade deficit, you quote Barclay's Capital economist Julia Coronado's claim that "It's still a pretty sizable trade deficit, but it's going in the right direction" ("Sharp Drop in Oil Price Helps Shrink Trade Deficit," January 14).
Doubtful, especially because this trade-deficit decline was caused, not by a rise in American exports, but by a disproportionately large fall in American imports. Given that in recent decades foreigners consistently pumped significant portions of their dollar earnings back into the U.S. economy as investment funds - and given that fewer American imports means reduced dollar earnings by foreigners - this fall in America's trade deficit is a movement in the WRONG direction, for it signals reduced investment in the American economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Reporting on the recent fall in America's trade deficit, you quote Barclay's Capital economist Julia Coronado's claim that "It's still a pretty sizable trade deficit, but it's going in the right direction" ("Sharp Drop in Oil Price Helps Shrink Trade Deficit," January 14).
Doubtful, especially because this trade-deficit decline was caused, not by a rise in American exports, but by a disproportionately large fall in American imports. Given that in recent decades foreigners consistently pumped significant portions of their dollar earnings back into the U.S. economy as investment funds - and given that fewer American imports means reduced dollar earnings by foreigners - this fall in America's trade deficit is a movement in the WRONG direction, for it signals reduced investment in the American economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Saturday June 6, 2009 at 1:30pm