Is Poker Socially Useful?: Part I by Alan N. Schoonmaker, Ph.D.

[Nighthowl]

A trade deficit is not a sign of a losing economy. This is a misunderstanding possibly because of the word deficit. The US current account balance actually results from the incredible productivity of the U.S. economy. The American people vacuum the world of the good deals that other people beat each other up to offer.

That this sometimes results in the dislocation of U.S. workers is only an extension of the traditional course of development of the U.S. economy, sometimes called "creative destruction". But the benefits to the many far outweigh the costs to the few, which were usually inevitable anyway.

Japanse televisions wiped out the U.S. industry in the nineteen seventies, causing great difficulties for domestic workers, but producing a huge consumer profit for the millions of television buyers. A large part of the savings from such process (consider also, cars, watches, forklift trucks, and so on) is reinvested in the U.S. economy.

Likewise he U.S. dollars now in foreign hands is not a negative. It is actually pent up demand for U.S. goods, services, and investments. Those dollars inevitably come home. I have seen the U.S. run enormous current account deficits over the years. First the Swiss, then the Saudis, then the Japanse, now the Chinese -- and, always, the Canadians -- these bubbles have always been followed by huge booms in the U.S. economy as that money is reinvested, usually in capital accounts that increase U.S. productivity. Don't worry, buy stocks, especially capital equipment manufacturers.

[Nighthowl]

Clarkmeister is right on both matters. After reading his responses to Naphand's insults -- C. was very congenial, considering -- I'd like to add a comment on the national debt.

When a debt is built by a government consuming the people's resources to buy popularity, as Johnson did in the sixties, the results are disastrous because it lowers the rate of capital formation (reducing profitability and productivity).

However, when deficits result from reducing the rate of government involvement in the economy, usually by cutting taxes, these deficits are in the way of investments, and if the citizens are allowed to participate freely in the economy, as they were after the Kennedy, Reagan, and Bush tax cuts, the results are very favourable for investors, workers, consumers, and international trading partners.

Deficits caused by tax cuts are socially useful. Insulting forum participants, calling them "Rumsfelds", and so on, is not.