Economist/conservative columnist Walter E. Williams wrote this week that the trade imbalance is not worth worrying about, since dollars flowing abroad go partly or mostly toward purchases in and from the USA.
I think Williams missed the point, an gave us a faulty analysis. My own perspective is that the consumption-based economy is destroying us, and a significant part of that viewpoint relates to imported consumer goods. Here is my response to what Williams wrote:
Williams wrote:
"When I spend $100 at the grocery, my capital account (money) goes down by $100, but my goods account (groceries) increases by $100. My grocer’s goods account decreases by $100, while his capital account increases by $100."
But this is not true of consumer purchases in general, and much of what we Americans buy from abroad are consumer purchases.
With consumer purchases, when you spend $100 you get an item that is worth LESS than $100, that you cannot resell for the same amount that you paid for it, even if it is in excellent condition, because it is now used. So your $100 buys consumer stuff you can immediately resell for $80-95.
Virtually NO consumer purchases have a chance to appreciate in value. Guns 'n' gold excepted, and gold and gems sold to consumers has such a high mark-up that it is useless as a store of value.
When Sony -- to use Williams' example -- buys American stock or American real estate, they are getting an item that may well GAIN in value, not instantly depreciate.
And so we are like the Indians who sold the Island of Manahatta for $20 in trinkets: exchanging guns for glitter; trading what is genuinely valuable away for junk that gives us brief pleasure but has little other value; or, to look at it another way, buying the contents of next year's Goodwill donation or garage sale.
And so-- we constantly impoverish ourselves, getting the worse of each consumer purchase, because we have an consumption-based economy. Williams may be a good bookkeeper, but he is not an economist.
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