Crying Wolf
Fear of the trade deficit is common--but is it warranted?
Don't let 'em scare you. "America's trade
deficit is a sign of strength, not weakness," argues
Daniel T. Griswold, associate director of the Center for Trade
Policy Studies at the Cato Institute, a libertarian think tank in
Washington, DC.
Griswold is the author of a recent study that dispels a number
of economic myths. "The trade deficit isn't a result of
unfair trade barriers," he contends. "What controls the
deficit is investment flows. The money flowing out of the United
States to buy imports flows back in net investment."
In other words, the cash Americans spend on goods helps drive
foreign economies, which export capital back here. That keeps
interest rates down, making it easier for U.S. companies to acquire
the equipment they need to grow.
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"Entrepreneurs should focus on the capital side of the
trade deficit issue," Griswold says. "They should realize
there's a lot of capital coming into the United States, and
that creates more opportunities."
For more information on the Center for Trade Policy Studies,
check out its Web site at http://www.freetrade.org
Christopher D. Lancette is a journalist in Atlanta who covers
international topics for Hispanic Business and other
publications.
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