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America Needs More World Trade, Not Less
| Article
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12949 |
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Section : |
CURRENT ISSUES
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| Issue
Date : |
5 / 1987 |
3,134 Words |
| Author
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Phil Gramm
Phil Gramm is a Republican senator from Texas and a former
professor of economics at Texas A & M University. |
Since World War II, the most significant international economic development has been the emergence of a global economy. The flow of goods, services, capital, and information has tied national economies into a global whole. Those who wish to debate against the wisdom of U.S. participation in a global economy are more than 30 years too late. It is already a reality.
The fact that the United States has a large merchandise trade deficit is repeated incessantly, but what does it mean? Historically, trade deficits have not been a harbinger of economic collapse. Japan during the 1950s and 1960s, its period of most rapid growth, ran tremendous trade deficits, and the United States, from the founding of the Republic through the Civil War, consistently ran substantial trade deficits even as it experienced dramatic and sustained growth.
In today's economy, trade deficits are the symptom and not the disease. We should be concerned about the trade deficit, but not for the phony reasons the special interests are claiming.
Listening to the protectionists, one would think that with the recent run-up in our trade deficit the economic performance of the United States has been dismal and our trading partners have been stealing American jobs. But the facts tell otherwise:
·While our trade deficits have nearly quadrupled since 1982, the United States created 11.2 million new jobs in the last four years, more than Europe and Japan combined in the past decade.
·Unemployment in the United States has declined by 28 percent in the past four years, while the unemployment rate in Japan has risen by 17 percent and the unemployment rate in the European Community has risen by more than 20 percent.
·There has not been a loss of U.S. manufacturing jobs. Between 1982 and 1986, as the trade deficit increased, the United States gained 406,000 jobs in manufacturing.
·The suggestion that we have lost high-wage manufacturing jobs while gaining low-wage jobs is also false. Not only have we increased the number of jobs in manufacturing, but real wages in manufacturing, which declined by 7 percent from 1977 to 1981, increased by 6 percent from 1982 to 1986.
·The notion of the
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