Cecil Johnson has an interesting article in the Star-telegram on Andy Kesseler's economics who argues that the trade deficit is not such a big deal. Here's the synopsis, think Toshiba laptop. A $300 Intel chip and $50's worth of Microsoft XP get purchased by Japan. In exchange, I buy the computer for $1000 - a $650 trade deficit. Bad. But look closer. The $300 chip made Intel $250, the software, $49.95. The hardware? They were lucky to make $50 overall. So who won?
Microsoft and Intel together spent $50 and made $350 - about 700%. Toshiba? It spent $950 and made $50. Interesting huh?
Posted by torque at October 25, 2004 5:17 PM | TrackBack