If only the U.S. economy would have a steep recession. Then, perhaps, Rep. Sherrod Brown's fondest economic dream would come true -- the U.S. trade deficit would decline.
Brown is the Democrat who has a big lead in his race to defeat incumbent Republican Sen. Mike DeWine in that traditional breadbasket of Republicanism, Ohio. Brown hopes to overturn the post-World War II free-trade consensus that has been upheld in both the Clinton and Bush administrations. One of his motives is the high U.S. trade deficit: "Our shortsighted trade policies are producing record deficits, and it is time to change course," he says.
The U.S. trade deficit was running at $69.9 billion in August, a record. This should, generally, be a matter of indifference. It means that our economy is healthy and viewed as an attractive place to invest. A trade deficit and capital-account surplus result from the inflow of foreign capital that enables the U.S. to consume and invest more than it could otherwise. Would Brown prefer the alternative?
When the U.S. was rising to become the world's greatest industrial power in the 19th century, it ran a trade deficit for roughly seven decades. During the Great Depression, we ran a surplus. Obviously, a trade surplus in and of itself isn't necessarily desirable. Japan ran a trade surplus when its economy was growing, and ran a trade surplus when its economy was headed toward a decade-long period of stagnation.
Brown wants to reverse the deficit by tightening trade rules. But this would not work. Trade barriers erected by the U.S. would almost certainly trigger foreign retaliation, while undermining U.S. competitiveness. So exports and imports both would fall, still leaving a deficit. Now, U.S. exports are thriving. They were valued at $122.4 billion in August, another record.
Brown complains that we are exporting jobs. One wonders: What jobs could they be? The unemployment rate is 4.6 percent, close to full employment. Yes, there are call centers for U.S. companies in places like India, but are those jobs so desirable that we need to fight to keep them here? Oddly, Brown supports an amnesty for illegal immigrants, a policy whose supporters often argue that illegal immigrants fill jobs Americans won't do. So the Brown position effectively is that we need to keep low-skill jobs -- so Mexicans can do them.