Saturday, October 15, 2011

A deficit is not a deficit

The word deficit is used in two political context as those it had the same meaning in each. It isn't.

When we talk about the federal budget deficit we are talking about the government spending more than it raises in taxes in a given year. Over time, government can't spend more than it taxes. To do so this year, it has to borrow, which means today's spending gets paid for later, by us or our children.

When we talk about the trade deficit, we are talking about net imports. The US runs a trade deficit with China because they ship us more than we ship them in goods. My family runs a trade deficit with A Fresh Market - they sell me more than I sell them. My family runs a trade surplus with my supplier - I sell them more than they sell me. Resolving a trade imbalance is non-sensical. There's no reason any two entities should be equal in trade. That doesn't mean the ledger doesn't balance. It does. If China gives us a bunch of stuff for little green pieces of paper, they can either buy our stuff with it or invest in our country. Either way, the dollars come back. Whether you area country or a company, it is not a bad thing for people to want to invest in you.

Budget deficit and trade deficit sound like related concepts. They aren't.

Friday, October 14, 2011

George Will gets it

Elizabeth Warren doesn't.


- Posted using BlogPress from my iPhone

Monday, October 10, 2011

Saturday, October 08, 2011

Tuesday, October 04, 2011

Good advice

For freshman of any school and age.

Monday, October 03, 2011

Early to bed, early to rise

Also makes your kids less likely to get fat.