> Let's get one thing straight: a widening trade deficit cannot
>create growth or jobs. One can argue, under certain assumptions,
>that exports create jobs. But by the exact same logic, imports take
>them away. So when imports exceed exports-- as they do now by a
>record amount-- it means that trade can only have a negative
>impact on employment and growth.
As with the EPI argument, I think this is way too simple; it assumes there are no gains from trade at all. Making this argument may cause people to brand me a covert right-winger, but hey, I've been there <http://english-www.hss.cmu.edu/bs/36/henwood.html>. Yes, a cheaper import may displace or replace domestic production. But imports have also kept a damper on domestic prices (the evidence of Nike shoe prices to the contrary). The CPI increased an average of 2.9% a year between the first four months of 1990 and the first four months of 2000; import prices, 0.7% over the same interval. For all imports excluding oil, they were up 0.3% a year. If imports keep domestic prices down, then people (those who don't lose their jobs to imports, of course) have more money to spend on other goods. We can argue about the relative importance of the two influences - lower prices vs. job loss - but to ignore the lower price angle is analytically incomplete.
Doug