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Crying Wolf

Fear of the trade deficit is common--but is it warranted?

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This story appears in the December 1998 issue of Entrepreneur. Subscribe »

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."

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