U.S. Trade with New Zealand

I’ve resumed my slow slog through all of the U.S. trade data and just finished New Zealand.  New Zealand is a fairly small country, but a relatively wealthy, developed one.  With combined imports and exports of over $3 billion, I thought it was worth a look.  With a population density less than half that of the U.S., the new economic theory I proposed in Five Short Blasts predicts that the U.S. should enjoy a trade surplus in manufactured goods with New Zealand.  Is that what we have?  Let’s take a look.  The following chart displays the balance of trade with New Zealand for five major categories of trade:  food products, energy raw materials (primarily oil and gas), metals & minerals, lumber and manufactured products. 

Trade with New Zealand

As you can see, as the theory predicts, we have a nice trade surplus in manufactured goods with New Zealand.  But that surplus is offset by deficits in food and lumber products.  Thus, we trade manufactured products for natural resources.  This is exactly how free trade is supposed to work to both nations’ benefit when both are relatively comparable in population density, unlike the disastrous results we get when trading with badly overpopulated nations. 

Yet another data point in support of the theory.  What a shame that economists have closed their minds to the consequences of population density.  They’re completely missing the most powerful relationship in the global economy and thus continue to make a mess of it.

2 Responses to U.S. Trade with New Zealand

  1. Yes, Population Density is the Main Culprit in America

    From my website [I read your book, great five star read and applicable to 2009 too, everyone should buy a copy!]:

    Wednesday, December 16, 2009
    What is Middle Class Anymore?

    Is it the $40-50K avg income per household?

    Is it the top 10% of American household incomes, i.e., $90K on up?

    Does the avg wage per household include the top 1% making it approx.flat a complete exageration?

    An excerpt from Pete Murphy’s “Five Short Blasts”, Chapter 1, The Economy’s Doing So Great, [bear in mind the book was written in 2007, before the horrifying collapses of household incomes in 2008-2009]:

    “…Here, once again, we see that at least half of all American families, represented by the medium line, have faired poorly over the last three decades. Medium income was growing nicely until the mid-70s. From that point it declined sharply until 1992, at which time it began a slow rebound. Yet, as of 2004, it remained 1.5% below its peak in 1976. Why is this? You have to wonder. Did something happen at that time in the mid-70s, that caused the earning power of most Americans to grind to a halt?…” [I’d add too, household incomes started adding more wage earners per house about that time too, what good it did]

    Pete also makes it clear in Chapter 1:

    “…The rich are getting richer – much, much richer – while the poor are getting poorer and while the middle class melts away. Virtually all the growth in wages and salaries, household and family incomes is concentrated in the upper class elite of American society….”
    Posted by softwarengineer at 10:29 AM

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