Thursday, January 04, 2007

Great Discussion of Protectionism vs. Trade Deficits - What they Really Mean to You and Me

It's over at Larry Kudlow's Money Politic$, by George Mason University's Economics Dept. Chairman Donald Boudreau. Why blog on this? It's something we need to know, to understand the world and national financial environment, at least a little. Politicians and media personalities demagogue this sort of thing all the time, playing on the feelings of people. Don't let them. Arm yourself with knowledge.

Kudlow's Money Politic$: Letter to Lou

While generally in agreement, I will add my two reservations to the ideas expressed in the post. First, I'd rather see American enterprises growing, rather than growing American employment by foreign-owned businesses, with growing foreign ownership of American industry. Secondly, while I am admittedly no expert on income taxation of multinational entities, I'd like to have a higher level of confidence that these foreign industries were paying similar amounts of taxes to those American-owned businesses pay, and not using accounting tricks to tell Uncle Sam that the American subsidiaries were breaking even or losing money, while all the profits "actually" are earned back at the parent company in Japan or wherever.

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