Wednesday, February 25, 2009

Trade Deficits
it would be great if it did pass, because they'd have to put up signs at the border telling people that "bumpernuts" were illegal <- I take most my grooming advice from physicists
Not really news, but I feel it's worth a brief discussion. People generally talk about the trade deficit as a bad thing. However, what they are overlooking is that a trade deficit is a way of correcting an imbalance. In order to have an imbalance of trade you must first have a country that is more prosperous. Countries don't just send cars and stuff to other countries because they need them, they send them because those countries are paying for them. But a trade deficit can only lead to an equaling of prosperity, not to the other country overtaking us. If Japan because more prosperous than us we would no longer be able to afford their cars, and we'd stop buying them. The same holds true for how people love to talk about China buying our debt. Buying debt is another way of saying investing in. Generally you don't want something you've invested heavily in to do poorly. China buying our debt is a good thing because it makes them more likely look out of our interest, because that will be profitable to them. International trade is a good thing, it levels the playing field and leads to a mixing of cultures that lessens tensions and prevents wars. When countries become interinvolved (<-a word) in one another through trade they have less to gain, and more to lose from war. The countries you have to watch out for are the ones that want nothing to do with others, and that also have some power. I've said it before and I'll say it again Russia is probably the greatest threat to the world. 5-10 years ago I probably would have said China, but they are slowly becoming capalist, and while they'll probably have to have some sort of revolution at some point to become a democrocy, I don't see them cause trouble outside of possibly taiwain/tibet any time soon.

Russia though is interesting. A huge powerful country that was pretty much ignored after it's collapse. However it still has the infrastructure and resources of a powerful country. I don't know if you know about this whole natural gas thing this winter (they turned off gas exports to Europe, pretty much just for fun), but it shows they clearly aren't interested in any sort of good will, and they have the still have great influence where they want it.

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