- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Send Trade Critics Back to School

Posted By Bryan Riley On July 20, 2010 @ 12:00 pm In International | Comments Disabled

[1]

Critics of free trade have used funny math to mislead Americans for decades. It may be time to send these critics back to grade school, so they can learn how to add and subtract.

Consider the following interpretation of this May’s international trade statistics: “Oil and consumer goods from China account for nearly the entire trade deficit [2].” Don’t you believe it.

Suppose your best friend spent $1,000 more than he made in May. Say he earned $2,000 and spent $1,000 on housing, $1,000 on clothing, and $1,000 on food. What accounts for his $1,000 budget deficit?

Once you answer that question, you can use the chart below to calculate what percent of the $42.3 billion May trade deficit [3] is accounted for by imports of oil and goods from China (see chart).

If you aren’t a big fan of China or imported oil, you can report that imports from China plus crude oil imports add up to 118 percent of the May trade deficit. What if you don’t like Canadians or Europeans? Imports from those countries add up to 129 percent of the trade deficit. Do you have something against imported computers or cars? There’s another 72 percent of the trade deficit. If you’re willing to play fast and loose with the numbers, there’s no end to the amount of dishonest assertions you can throw out.

By selectively misusing bits and pieces of international trade data, trade critics distort the big picture. It’s time to send them back to school for a lesson in how to honestly add and subtract.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2010/07/20/send-trade-critics-back-to-school/

URLs in this post:

[1] Image: http://www.foundry.org/wp-content/uploads/trade-deficit.jpg

[2] Oil and consumer goods from China account for nearly the entire trade deficit: http://www.foxbusiness.com/story/markets/industries/government/trade-deficit-threatens-double-dip-depression/

[3] $42.3 billion May trade deficit: http://www.bea.gov/newsreleases/international/trade/2010/xls/trad0510.xls

Copyright © 2011 The Heritage Foundation. All rights reserved.