Just released: the October, 2007 trade deficit widened to $57.8 billion. That’s an annual rate of just under $700 billion, or $2,300 per year for every man, woman and child (over $10,000 for every family of four) in this country! That’s how much poorer you are as a result of our misguided free trade policy.
Contrary to economists’ forecasts, the falling dollar is having no effect on reducing this deficit. But this is exactly what anyone who understands the theory presented in “Five Short Blasts” would predict. Exchange rates have almost nothing to do with the trade deficit. It is the gross disparity in population densities between the U.S. and trading “partners” like Japan, Germany, China and others that is driving the deficit.
We need a tariff structure indexed to population density NOW!