Trade Deficits: Good or Bad?

Russell Roberts of George Mason University has a great article dispelling the hysteria over America's rising trade deficits.

A trade deficit is actually quite desirable, not the other way around. For each good or service America imports, that is one good or service it does not have to spend time producing on its own. Exports are, more or less, the cost that a nation pays for its imports. A smaller export-to-import ratio is really no different than lower prices on the shelves at your local store.

In our personal lives, we pursue trade deficits all the time. Grocery shopping is a great example. We WANT a large trade deficit with our supermarkets. For every essential item they provide us, we do not need to invest time, effort, and money ourselves. And certainly we do not want to see prices raised, just for the knowledge that we now have a smaller "trade deficit" with our market, and it would be more painful for that supermarket if we stopped going there.

But, as with so many other things in life, cool-headed reason goes out the window when politics gets involved.