User:Heliopolissa

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/Sandbox On the U. S. Trade Deficit

Mercer’s position on the U. S. trade deficit differs from that of many libertarians, including economist Don Boudreax whose “typical libertarian post-graduate cleverness” she rebutted. Countering the argument that an aggregate, negative balance of trade is insignificant as an economic indicator, Mercer argued by analogy that while there is nothing wrong in the short term with running a deficit with one’s hairstylist or car dealership, economic damages accrue when credit-based purchases are not paid for--a condition she sees as typical of the spending habits of U. S. consumers. She argued further that libertarians who laud consumption do not often account for the fact that this consumption is, in general, supported by debt. In this context, a trade deficit represents “not an increase in wealth, but an increase in indebtedness.”

Mercer believes that dismissal of trade deficits as economic indices arises from a view of the economy as “a series of discrete parts” rather than an “ineluctably interconnected” whole, whose most prominent characteristic is “debt—micro and macro; public and private.” Because of this, Mercer disagrees with libertarians who dismiss the trade deficit by pointing to the U. S. trade surplus during the Great Depression, arguing that the trade surplus during those years does not invalidate the nation’s current trade deficit as an economic indicator. Rather, she suggests that fundamental economic indicators may be worse today than they were in the 1930s, “since this country has never before been so deeply in hock as it currently is.”