That’s the headline on a new Investor’s Business Daily editorial, and we feel compelled to ask: Why the “dropped g”?
Other than that, the editorial makes the clear case for expanded trade as an economic essential, chiding the charlatans who make free trade the scapegoat for U.S. economic troubles. Trade helps keep us afloat, the IBD argues, daring to cite facts:
Exports have been rising at a remarkable 11.1% annual pace since 2000 (see chart), nearly doubling average nominal GDP growth of 5.8%. It’s no exaggeration to say trade has become a key underpinning of our economy’s growth.
Recently, the National Association of Manufacturers noted that we now sell more manufactured goods than we buy from all those countries we have free-trade agreements with. The first-quarter surplus with our free-trade partners was a half-billion dollars — compared with a deficit of $176 billion with the rest of the world.
In short, free trade has become a major boon to American makers of everything from jetliners and earth-moving equipment to movies and financial services.
The IBD editorial also notes that economists Gary Hufbauer and Matthew Adler of the Peterson Institute say eliminating remaining trade barriers would lift household incomes as much as $12,000 more.
All in all, a punchy editorial arguing clearly for the benefits of trade. We suggest readin’ the whole thing.
P.S. For more on trade from the Peterson Institute:
Peterson Perspectives: Interviews on Current Issues
The decision by the House of Representatives to change the rules for Congressional action on trade agreements drives a gaping hole in US trade policy and poses the gravest threat to the global trading system in decades, says C. Fred Bergsten in a website interview. See also Policy Brief 08-5.
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