TONELSON: Transformational fantasies and S. Korea trade

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The lessons of recent trade experience, therefore, are crystal clear. Reducing American trade deficits is vital for boosting growth and hiring, especially with slack domestic consumer demand and business investment, and mounting pressures on public debts. But signing new trade deals, especially with arch-protectionist countries like South Korea, can’t achieve this goal. Instead, domestically produced goods must be substituted for imports in America’s own market. The result would be hundreds of billions of dollars worth of economic expansion without raising overall demand levels. Budgetary pressures would consequently ease. Perhaps most important, employment prospects would brighten not only for Main Street Americans, but for political incumbents as well.

Alan Tonelson is a research fellow at the U.S. Business and Industry Council, a national business organization whose nearly 2,000 members are mainly small- and medium-sized domestic manufacturers. Author of “The Race to the Bottom,” Mr. Tonelson also is a contributor to the council’s website www.AmericanEconomicAlert.org.

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