Have any of you read "Economics in One Lesson" by Henry Hazlitt?

In one chapter he explains why trade deficits essentially have to balance themselves out--if we buy Chinese goods, they essentially are at some point forced to buy the equivalent in American goods/services at some point in the future. What else can they do with the US dollars?

It also has really good explanations about how good the government is at screwing up everything they touch, but make it sound good. When government subsidizes a group or in any way gives incentives, they are by definition causing people to move away from the most efficient use of resources to less efficient uses. They also often hurt the very group they are trying to help.

That's not to say that it is never warranted to help a specific group, but overall it generally helps the most people for the government to just keep the hell out.

The republicans are just as bad as the democrats in this respect, they all seem to want to spend endlessly and favor specific causes, they just choose different things to screw up.

When I read that book I wanted to send a copy to everyone in Congress.

Democrats don't subsidize industry you're thinking of republicans.

Skrum I'll check out your numbers later with wikipedia, but for now do you reap similar results if you put your numbers in terms of Euros as opposed to dollars?

It astounds me how people can point to examples of governmental incompetence produced by republicans and then use it to justify voting for republicans over democrats because they flirt with the idea of classical liberalism.

BO:

For France, Germany and the Netherlands you may get the same result because they are all in the Euro zone and the "exchange rate" dollar is presumably (but I am not sure) based on the Euro/dollar rate. But maybe it a basket of currencies rather than the Euro.

Proxy Cheater:

I read Economics in One Lesson long ago in college and found it insightful.

The Chinese lend back most of their dollars which we use for investing. And they probably keep some as reserves.

A trade deficit will be associated with either a private domestic deficit in saving and borrowing or a government deficit. Nothing wrong with deficits per se if the borrowed funds are going into investments that will pay off.

Try also reading The God of the Machine by Isabel Paterson. It is available on line.

The Chinese have 3trillion dollars in their reserves

The currency reserves as popularly reported include treasury debt as reserves. I am referring to holding of physical dollars or of dollars in bank accounts. Transfer of debt is not reported in the current account of international trade, it is reported in the capital and financial account. The difference between the U.S. current account deficit with China and the U.S. capital and financial account surplus with China is the change in China's holdings of physical dollars or dollars in bank accounts (plus some other adjustments not germane to the current topic).

BO: "Democrats don't subsidize industry you're thinking of republicans."

Are you joking? Solar Panels; Wind farms; Electric / Hibrid cars; public transportation...

Need I go on? Or do you withdraw your earlier statement.

let me rephrase, democrats don't subsidize profitable industries to the detriment of public goods like air conditions and carbon emissions