Kurt Bouwhuis, Mackinac Center Intern
I’ve always wondered why the words “trade deficit” carry a negative connotation. What it usually implies is that one party, through the coarse of a series of transactions, has acquired more or less monetary value (money) than it has received in goods and services.
When looking at a nation’s trade deficit, people tend to get concerned when more goods and services are acquired than monetary value. Look at the United States for example. People are concerned that the USA imports more than exports. This means that we have given foreigners paper, and in return have received goods and services such as food, gas, and cars.
Why choose geography as a determining factor in calculating trade deficits? What if we broke trade deficits down to into individuals or households? I bet individuals have trade deficits with other individuals, businesses, banks… Households have trade deficits as well. I would also bet that towns, cities, counties, and states have trade deficits. Is this really a problem?
I personally have a deficit with Apple Inc., which has been generated within the past two years. I have purchased two iPods valued at $600. I have also purchased a laptop valued at $2200. I have spent $2800 more dollars on Apple than they have spent on me. I have no problem with my deficit. In fact, I plan on increasing my deficit with Apple in the future.