Tuesday, September 07, 2010

Blaming us, the victims, for our crippling trade deficit

“Economic growth slowed by trade gap” was a page one headline in the August 27 Washington Post. The article so irked me that I sounded off in a letter to the editor the same day. Here’s what I wrote.

Yes, our nation’s huge trade deficits are continuing to take their toll. I’m delighted that, at long last, the Washington Post is awakened to a grim reality of economic life.

But you repeat an old mistake. Although you put the blame on several factors, the only one you mention is “overconsumption.” You think, for example, that we, the consumers, are the villains for our trade deficit with China. Really.

Have you ever tried to buy anything made in the U.S.A.? If so, you see how we have been deprived of choice – by a trading system credited, wrongly, for increasing consumer choice.

The continuing total merchandise trade deficit – nearly $50,000,000,000 for June alone -- is basically a mechanism to redistribute the wealth and income of the American middle class to further enrich the upper 10 percent of Americans and Asians. Your story failed to mention that the deficit with China was $26,200,000,000 for June alone.

What is really an overlooked “factor” in this tragedy? Take a look at corporations based in the U.S., American and foreign, and examine the volume of their intra-firm trade – that is, trade between two arms of the same company, also called related-party trade. As the Census Bureau reported on May 12, last year related-party trade accounted for $740,500,000,000 in U.S. goods imports – nearly 48 percent.

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As I expected, the free-trade-obsessed Post did not print my letter.

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