printThe following is from my new, WND.Com column, “Libertarian (Trade) Deficits”:
“… I am confident the legendary Lou Dobbs understands that voluntary exchanges are by definition advantageous to their participants. Costco, my hair stylist, and the GTI dealer—all have products or skills I want. Within this voluntary, mutually beneficial relationship, I give up an item I value less, for something I value more: a fee for the desired product or service. My trading partners, whose valuations are in complementary opposition to mine, reciprocate in kind. Silhouetted by the force of the state, this synchronized, magic market starts to splutter, and people suffer. That’s a no-brainer.
However, when it comes to the glories of an aggregate, negative balance of trade, allow me to respond to the typical libertarian post-graduate cleverness, as evinced by Dr. Boudreaux. In one respect libertarians are right: there is nothing wrong with my running a trade deficit with Costco, my hair stylist, or my GTI dealer, as I do—just so long as I pay for my purchases. The data demonstrate that Americans, in general, don’t.
All in all, by Vox Day’s account, ‘U.S. households, corporations and various levels of government’ owe fifty three trillion dollars! The consumption being lauded by libertarians is debt-driven consumption. In this context, a trade deficit is significant, inasmuch as it reflects not an increase in wealth but an increase in indebtedness.
To dismiss the gap between U.S. exports and U.S. imports as an insignificant economic indicator—now that’s silly. ” …
The complete column is “Libertarian (Trade) Deficits”
Read my libertarian manifesto, Broad Sides: One Woman’s Clash With A Corrupt Society.
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Quite an article by Ilana in http://www.WorldNetDaily.com and it creates much thought about what each of us does in an economic sense. Some of my mental notes involved the following: 1. Rule of 72 – when borrowing, divide 72 by the Interest Rate to produce the “year span” to double the loan amount actually paid, e.g. $1,000 @ 6% means in 12 years, the payback amount rises from the original $1,000 to $2,000. 2. Every time one buys on credit, e.g. an automobile, this happens: An instant loss in value, depreciation, of the vehicle takes place such that if the down payment is insufficient, the buyer is immediately underwater on the loan simultaneously the loan principal immediately accrues interest thus increasing what is owed. Question: How will the U.S. government pay back those lenders who, by purchasing Government Bonds, have lent money to them / us? Residential and Commercial properties have been devalued. Many people are hard-pressed against the wall for income and increasing taxation will kill them. Unemployment is high. Finally, the Feds do not use GAAP and some writers say the actual debt, including all non-booked future obligations, could total in excess of $100 Trillion. What would you as leader of a foreign country demand from the U.S. for repayment? My opinion is we are where THEORY meets REALITY. I am very concerned.
Well, you look cute in your new car.
I own my house and car outright, and (not counting some medical bills that need to be deciphered with insurance and the pre-paid health savings plan) have ZERO liabilities. This is how I like it – perhaps making me the Anti-Keynesian. I have no idea if my frugality has penetrated to my daughter other than “Daddy you’re so cheap”. But I sure as hell do not wish to bail out spendaholic wastrels who can vote to confiscate my
assets, increase taxes, and print more money.
Americans are not the only people at fault. If some Asian wants to sell me cars, shirts, etc. for autographs of Tim Geithner on green paper with pictures of dead Americans, it is arguably a great trade. And there’s plenty of paper available for printing!
As for Postrel’s optimism – knowledge can be summed up on a thumb drive and sent overseas in a flash, American schools are dumbing mechanisms for politically correct Affirmative Action, and half of American jobs are lawyers/accountants suing/auditing/regulating each other – none of which CREATES real wealth. A nation of debtors addicted to purchasing frivolous items that they cannot afford is not in healthy shape.
I almost stood up and applauded when I saw the following statement in you WND column today. “Far from comprising discrete parts, the economy is ineluctably interconnected.” What makes all of this even more interesting is that these elements are by their very nature mathematically unstable as most “non-cash” transactions involve some form of compounding interest.