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Black Sunday

In: Business and Management

Submitted By uv336
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Trade Deficit Grows Due to Free Trade Policies
April 10, 2012 Karl Rusnak 1 Comment

Unemployment is rampant in the United States today, and Americans are rightfully asking for policies that will bring the problem under control. Unfortunately under our current free trade policies there is a direct correlation between unemployment and the trade deficit. As unemployment decreases we see a rise in the trade deficit because we have become so dependent on imports for our needs. This means that, until we fix our trade policies, any gains in unemployment will be tempered by a ballooning trade deficit. An economy with a massive trade deficit is unsustainable, and we must change our trade policies if we want to see our nation prosper.
The official unemployment figure is currently 8.2 percent. Many economists estimate the rate at which the economy is considered to be at full employment to be about 4 percent, because even under the best conditions there will be individuals seeking jobs. Certainly full employment is desirable, but under our current policies it would do little to create any long-term prosperity for the United States. Our trade deficit was over $500 billion last year, but at full employment it is estimated that we would have a trade deficit of $750 billion or more. As more Americans get jobs, they have more purchasing power. Unfortunately many of the items Americans purchase are now made overseas, which sends American dollars overseas instead of keeping them here in the U.S.

The money has to come from somewhere when we purchase more than we sell, and this leads to debt. That debt can either come in the form of public debt or private debt, but both can be damaging. Many Americans, both conservative and liberal, are very concerned with the rising...

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