The Trade Deficit Causes and Solutions essays

The Trade Deficit Causes and Solutions essays There is a strong tendency among American politicians and economists to attempt to deal with issues and problems in isolation. Politicians take this approach because they apparent have difficulty dealing with complexity. Economists take this approach so that they can factor troublesome variables out of their equations. One result of the approach of treating issues and problems in isolation is the development of solutions that are ineffective when they are implemented in the real world where isolation from other factors is no longer an option. The tendency to deal with the issue of international trade in isolation has led to policies that tend to make the situation worse rather than better. The United States government (it makes little difference which administration is in control of the White House) likes to play the role of the world's policeman (and it likes to be involved in all disputes). This role is very expensive, but the United States government and United States taxpayers do not like to ask Americans to pay the bill in the form of a balanced budget. A balanced budget would require an increase in taxes, as there is just so much the Congress can squeeze out of services for the poor and the old without bringing the electorate down on them (Gale Therefore, the Congress and the President agree to pay the bill resulting from foreign policy by resorting to deficit spending. Deficit spending on a massive scale by the federal government places the government in direct competition with American businesses and American consumers in the capital markets. The government needs money to fund the budget deficit. American businesses need money to fund new projects. American consumers need money to buy new houses and cars. In the normal course of events, however, there is not enough capital to satisfy all of these needs when the federal government is a massive borr...