Wednesday, December 20, 2006

Misplaced Economic Pessimism On Trade

It is terribly unfashionable to express optimism out loud these days, but when Newsweek's Robert Samuelson runs with the "trade imbalance disaster looms" nonsense, I can't let it go.

The people who insist the sky is falling on the U.S. economy count on readers quivering in fear and ignorance at terms like "real-estate bust," "steep gas prices," and worst of all "skewed trade."

The fact that mankind has survived and thrived through every housing cycle since the Adam and Eve were evicted from the Garden of Eden mystifies those who whisper this time could be different. If gas prices were too high, demand would have slowed by now.

And the trade deficit merely represents foreign entities sending goods and services to America in exchange for little pieces of paper. The panic wasted over this would be better spent on our broken tax system.

But even if we don't fix the tax system, we can easily overcome any hardship caused by these other bugaboos.