In this video, Ron Paul and Daniel McAdams discuss whether or not protectionism will improve the American economy.
Specifically, Paul and McAdams reference this article by Walter Williams in which Williams notes:
Let’s look at the political angst over trade deficits. A trade deficit is when people in one country buy more from another country than the other country’s people buy from them. There cannot be a trade deficit in a true economic sense. Let’s examine this.
I buy more from my grocer than he buys from me. That means I have a trade deficit with my grocer. My grocer buys more from his wholesaler than his wholesaler buys from him. But there is really no trade imbalance, whether my grocer is down the street, in Canada or, God forbid, in China.
Read the full article.
Ron Paul goes on to make the following points:
- Trade deficits aren’t a problem.
- It’s a bad idea for politicians to complain about China since China has been financing the US’s debt.
- Companies Leave in part because they’re trying to preserve their assets from government intervention.
- “The marketplace doesn’t exist for big business or profit. The market exists for the consumer. If you don’t support the consumer, you go out of business.”
- Even when we buy cheaper goods that are “dumped” on the market (i.e., subsidized by foreign governments) lower price goods are still a net gain for American consumers.
