July 6, 2006


The Trade Deficit: Much Ado About Nothing (Lawrence W. Reed, December 1998, The Freeman: Ideas on Liberty)

I have a dirty little secret that I want to share with readers of The Freeman. It’s about a nagging problem I have had for a long time. It just never seems to go away. Heretofore, I have not wanted to admit to this problem in public because the newspaper headlines remind me monthly that this sort of thing is bad and it’s embarrassing. But I’m going to come clean, hoping that maybe someone out there can help me.

My problem is this: I have a trade deficit with J.C. Penney. That’s right. Month after month, I buy more from J.C. Penney than J.C. Penney buys from me.

In fact, J.C. Penney has never yet bought anything at all from me. It’s been a one-way street right from the day I got my credit card in the mail. And I don’t expect that this is going to change any time soon because the retail chain shows no interest in buying my chief export, which is columns like this one. It just doesn’t seem fair.

I’ve actually considered several options. Each one would probably reduce or eliminate my trade deficit with J.C. Penney, but some wise guy always points out new problems each of these scenarios might create:

• I could get Congress to force the company to buy enough of my columns to offset what I spend in its stores. But the more J.C. Penney buys from me, the less it will be able to buy from others, which will only increase their trade deficits.

• I could get Congress to force J.C. Penney to cut its prices so that I won’t have to spend as much to get what I want. I thought that might at least reduce my deficit, but at lower prices I might actually be tempted to buy more. Or J.C. Penney might come under fire from the antitrust people for dumping its goods below cost.

• I could simply quit buying from J.C. Penney. That would really teach them a lesson. But then, doggone it, I like what I’ve been buying from them. If I boycott them, wouldn’t that be like cutting off my nose to spite my face?

Of course, I don’t really mean any of this. As a free-market economist, I know that there’s a fourth option here and it’s the only one that makes any sense: I should ignore this “problem” and never pay any attention again to whatever the trade situation is between J.C. Penney and me, except to pay my bills on time. America as a whole should do essentially the same thing. We should fire the people in Washington, D.C., who compile the numbers, and the problem will go away.

They had a sale over the 4th where they were practically giving stuff away anyway.

Posted by Orrin Judd at July 6, 2006 11:55 AM

Victorian England didn't have a problem. To paraphrase Mel Brooks, "It's good to be #1".

Posted by: Gideon at July 6, 2006 12:32 PM