Keeping eyes on the prize

In a recent post Alex references some bullet points from a recent Financial Services Forum report. The first points out that globalization has boosted living standards quite a bit; the second highlights America’s trade deficit. But the first point should render the second just about meaningless. If living standards are rising, why fret so much about trade deficits? During the 1930s, the US “enjoyed” a trade surplus every year besides 1936. But those old days weren’t exactly good. From a 2001 paper by Cato’s Daniel Griswold:

A survey of the U.S. economy since 1973 confirms that, by almost any measureââ?¬â??economic growth, employment, industrial production, poverty reductionââ?¬â??the economy has performed better in years in which the trade deficit rose than in years in which it shrank.

Related: If things are so great, why do I feel so lousy? Part 5