Source: Bet On It
by Bryan Caplan
“Trade deficits could arise because Americans are living beyond their means, habitually borrowing more than they save. But even good economists habitually overlook a competing story: Trade deficits arise because foreigners think the United States is a fantastic place to do business. So fantastic, in fact, that they would rather invest in the American economy than consume American products. The noble Don Boudreaux has been cogently defending the latter view for years, repeatedly pointing out that — contrary to the ‘living beyond their means’ story — Americans’ net worth has rapidly grown since 1975, the last year the U.S. ran a trade surplus. If you’re skeptical, consider the fact that the U.S. has another, even more durable, deficit: the migration deficit.” (04/16/25)