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Jared Rixstine : Balanced Trade, A Critical Analysis

Jared Rixstine has written a thorough analysis of trade theory and the place of the Balanced Trade Theory in the discussion. Mr. Rixstine is a freshman at Millikin University in Decatur, IL. He has studied economics and foreign policy (with a focus in international trade) for nearly seven years. Here is his paper :

Swapping Sandwiches:

A Comparison of International Trade Models to Determine Economic Superiority

Copyright, 2013 by Jared L. Rixstine, Decatur, IL. This text can be posted in any electronic forum or used for academic endeavors. For publication in printed form, please request permission from the author: email: jrixstine@millikin.edu; Telephone 309-265-1660.

Throughout television, books, in daily life, the act of children trading components of their lunch is a commonly known experience. Indeed, swapping sandwiches is usually one’s first exposure to the basis of economy: bartering. Due to the development of currency, the ancient process of negotiating a simple agreement to trade one good for another evolved into the massive economies present in the world today. It is important to note, however, that bartering (in its modern form – international trade) still comprises one of the main pillars of America's substantial economy. In order to provide for the distribution of goods and services, nations negotiate trade agreements that are simply large-scale versions of ancient bartering practices. Though it is largely ignored in popular culture, international trade is a crucial component of American prosperity.

Indeed, America fought for its independence in part due to disagreements about trade practices. England had adopted policies that forced the American colonies to pay a premium for goods that they imported from the mother country (essentially, an early form of tariffs). These tariffs were not appreciated by the colonists (consider the Boston Tea Party and similar events); they were unable to purchase the goods they needed at reasonable prices. Once the U.S. won its independence, it was forced to accept the challenge of forming an independent economy. As such a small nation geographically removed from the rest of the developed world, trade had to become the centerpiece of our infant economy. While many believe that America’s exponential growth in the nineteenth century decreased the importance of international trade, in the face of burgeoning national industry and agriculture, the fact of the matter is that trade became more important as the nation expanded. As America gained strength, the balance of its trade shifted from importation to exportation. Though it shifted, trade remained at the center of America’s roaring economy. With the dawn of the twentieth century, America placed greater emphasis on domestic production and sustainability—moving trade to the back burner. Regardless, international trade agreements remained crucial to economic activity, they just existed more as an undercurrent. During the period that trade was an obscure element of national policy, government leaders decided upon the traditional Free Trade (FT) model as the basis for

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America’s few trade agreements. Later in the twentieth century, America stopped monitoring its trade practices and began the risky practice of importing more than it exported (creating a trade deficit). This deficit, now having grown to elephantine proportions, has brought trade back into the spotlight of the American economic situation. Now that trade has re-emerged as a relevant topic, many trade models are being proposed and deliberated, but little headway is being made in productive solutions. It is the purpose of this paper to analyze two models of trade - Free Trade (FT) and Balanced Trade (BT) - to determine which is economically superior and more politically viable. Based upon my research and analysis, I have come to the conclusion that while most governments adopt the FT model when it comes to international trade, Professor Michael McKeever's proposal of a balanced trade model carries a greater advantage to both domestic and international economies.

Before delving into the specifics of the two models and the theories behind them, it is important that a general background of economics as it relates to trade be provided. As Adam Smith (quite arguably the founder of modern economics) says in his sentinel work, The Wealth of Nations, “Political economy . . . proposes two distinct objects . . . It proposes to enrich both the people and the sovereign” (Smith 323). Today, using modern language, one could substitute “the nation” for “the sovereign.” Economics, as it relates to government policy, is geared towards creating the most wealth for both the government and the people. Too often, however, the meaning of the word “wealth” is misunderstood. Smith goes on to discuss the incorrect assumption that wealth is equivalent to money. It seems to make sense that the individual or nation with the most cash is the wealthiest, but in actuality, cash flow is only one component of a nation’s wealth. The country with both the most stockpiled goods and the most cash flow is the wealthiest. Currency is only as valuable as the recipient views it – it serves no purpose other than to take the place of a good. Goods are inherently valuable and a nation with a plentiful supply of them has the most political and economic clout (Smith 323-325). International trade is the most crucial tool in accomplishing this goal of an increase of goods. As K. Aswathappa points out, “The fact remains that the natural resources of the earth are unevenly distributed. One country possesses product X in surplus and lacks in respect of product Y. In another country the reverse may be true” (Aswathappa 58-59). It is this uneven distribution of resources that fuels international trade. As countries find themselves in need of certain products, they discover an excess of another. Finding a means by which to balance the shortfall with the surplus in such a way that brings the most economic advantage to both parties is the sole purpose of trade models. The classical economist David Ricardo wrote in the nineteenth century that if Country 1 has a natural ability to specialize in good A (since they can produce A with four times the efficiency of Country 2) and Country 2 has a natural ability to specialize in good B (since they can produce B with four times the efficiency of Country 1), it only makes sense that these countries specialize in their respective goods and trade the products (McKeever, “Balanced Trade”).

The most crucial part of the trade process is crafting agreements that minimize cost and maximize profit. Returning to Smith’s analysis of political economy, he points out that each nation simply tries to turn “the balance of trade in its favour” (342). In an unfavorable agreement (or “balance” as Smith says), nations find themselves exporting money to offset their excess of imported goods (Smith 326-327). It might appear strange that nations are hesitant to sustain a massive influx of goods even if the consequence is an outflow of cash. After all, Smith says goods are more valuable than cash. The reason that there is such a fear of over-trading is that a decrease in cash flow causes credit crises similar to the ones that started the Great Depression

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and the 2007 Financial Crisis (Smith, Feipel interview, McKeever interview). While nations with more goods might be wealthier, it is important that these nations have the ability to utilize or trade the goods that they have. A nation with a crippled domestic economy is not able to use the goods they have to their advantage. This situation of having more imports than exports is commonly known as a trade deficit. Both of the dominant political ideologies (Conservative/Liberal) have their own opinion on the evils (or benefits) of a deficit and solid evidence seems to support elements both sides.

With a basic introduction of political economy and trade having been given, an overview of economist Michael McKeever’s Balanced Trade (BT) model is in order. According to McKeever, “The idea of Balanced Trade is essentially to only buy from other countries for the amount of dollars that we sell to other countries. We balance our budget and do not have a surplus or deficit (think of balancing a personal checkbook). The outcome would be more jobs here and a healthier domestic economy” (Interview). In this model, the overriding value is an exact balance in the flow of capital and goods (McKeever, “Balanced Trade”). It would seem to many that this model is common sense and that McKeever could not possibly have come up with it on his own. To an extent, this would be correct. Professor William Feipel from Illinois Central College points out that during World War II England tried to balance its trade. When it did so, its docks fell into disrepair and the dock workers lost their jobs (Interview). In the end, it took the U.K. nearly twenty five years to recover from this loss (Feipel Interview). The key difference between England’s action and McKeever’s proposal is that BT balances transactions across the board; it does not mandate a sudden, sharp reduction in imports or exports. Thus Feipel’s example of England is largely inapplicable to the discussion of BT as it relates to this paper. McKeever goes on to explain in his essay that BT profits nations most (which, recalling Smith above means acquisition of both capital and goods) by stemming the flow of wealth exported overseas. Suppose that the United States adopted BT. Merchants and government suppliers would be forced to equate the value of goods imported with the value of goods exported (including capital/cash). Such a policy shift would require selective cuts in imports with massive increases in exports in order to balance and strengthen the national economy. A trade agreement with a nation can be made if and only if the U.S. is able to keep its equal balance between imports and exports. This model is proposed in direct opposition to Free Trade (FT) which, according to McKeever, is much less efficient than BT (“Balanced Trade”). Before examining criticisms and praise for BT, it is crucial to understand the basic structure of FT.

Free Trade is one of the oldest models of international commerce. Because of its longstanding position as the most popular model of trade, it seems odd that a different model could be superior. However, upon analyzing the very foundation of FT as a structure, its weaknesses become readily apparent. Prima facie, FT is easily understood. Ronald Mendoza and Chandrika Bahadur explain, “In its simplest sense, the pursuit of free trade belongs to the blanket process of ‘leveling the playing field.’ If one takes this analogy to its logical conclusion, more free trade would result from the application of the same policies, rules, mechanisms, and institutions to each participant in the trade regime, regardless of origin or capacity” (26). FT, then, sounds like a very egalitarian and democratic form of economic trade. Upon closer examination, however, some inherent harms of this system become visible. Smith, for example, writing in the eighteenth century points out, “Such treaties, though they may be advantageous to the merchants and manufacturers of the favoured, are necessarily disadvantageous to those of the favouring country” (419). Indeed, the nation being shown special attention is allowed to develop a

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monopoly in the “donor” country - a massive economic opportunity. The “donor” nation, conversely, will lose its domestic industry of that good. Suppose the United States agreed have FT with regarded to bananas from Panama. The Panamanian bananas are produced much more cheaply, are just as good, and will be sold in American stores for a price much lower than the American bananas. Most (if not all) of the American banana farmers would be forced out of business due to the Panamanian industry undercutting their market. Proponents of FT argue that this is not a harm, that it caters to the natural strengths of individual nations. This argument will be discussed in much greater detail below. At this point, it is necessary to summarize the two models of trade discussed above. The first, McKeever’s BT, suggests that nations ought to balance imports/exports and cash flow as a means to protect domestic industry and promote economic welfare. The second, the traditional FT model, suggests that nations ought to enter agreements with each other in order to monopolize upon the natural strengths of each country. These two models are very much opposed to each other as will be seen in the following arguments for and against BT.

Though it is in its infancy as a formally proposed model, BT holds a fairly prominent place in the modern world. Warren Buffett, American investor and head of the conglomerate Berkshire Hathaway Company, advocates BT. While he does not directly reference McKeever’s proposal in his writings, he undoubtedly supports the concept. In 2003, he wrote an article published in Fortune magazine that warned readers of the dangers of America’s massive deficit. In this article, Buffett offers extended analysis and policy proposals while steadily promoting BT. In addition to Mr. Buffett’s support, McKeever has seen a number of textbooks integrate his theories and proposal into their material. In his own words, “BT has been referenced in a few textbooks, but it has not yet caught on in creation of public policy” (McKeever Interview). Additional support for BT is also given by the Ideal Taxes Association (ITA). The economists of the ITA point out that the purpose of trade is to exchange of goods and services as the parties involved seek to increase prosperity and satisfaction. Interestingly, “Every example in American textbooks on international trade shows the benefits of trade even when countries impose barriers as long as trade is in balance” (Richman “Not Free Trade”). In other words, though it is not used in practice, BT forms the basis of trade theory. The idea of BT is not unheard of— Representative Marcy Kaptur of Ohio has twice proposed a BT bill (albeit a weak one) on the floor of the House (Richman “Balancing Trade”). It seems, then, that BT is a widely supported concept though McKeever’s work and exact proposal is not well known.

The results of economic inquiry into the effects of BT, even in its relatively embryonic state, are compelling. The entire economic objective of BT is to eliminate (or at the very least, reduce) trade deficits in order to allow for a more conservative balancing of trade flows. The vast majority of the economic ramifications of BT come from this attention to the trade deficit. McKeever, in a summary of the effects of his theory, contends that:

BT creates the most wealth inside any country because it avoids transferring wealth overseas through excessive imports and avoids excessive domestic inflation resulting from an excess of exports. This trade theory is an alternative to the efficiency theory of free trade that is not protectionist, autarchic nor promoting of trade wars: it allows for the benefits from trade while providing a mechanism to reduce trade's occasional harmful consequences (“Balanced Trade”).

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This is, necessarily, a biased perspective. McKeever’s claims seem to make economic sense, but it is important to turn to classical economists and legislative officials to verify that his claims are, in fact, realistic. As mentioned above, trade deficits result in the exportation of cash and acquisition of loans –this activity creates the root of the fiscal problems related to trade. Exportation of cash necessitates a reduction in our Gross Domestic Product (GDP) and domestic cash flow equivalent to the amount of exportation (McKeever “Balanced Trade”). Acquiring loans to offset the cash flow (which is America’s policy of choice), creates even more problems. According to the experts, constantly borrowing from foreign sources is extremely difficult to maintain (Richman “Trade Deficits”). Furthermore, countries with substantial trade deficits are much more highly prone to financial crises such as inflation and credit crunches (Richman “Trade Deficits”). The United States has experienced both of these effects already and the intensity and frequency can only rise. Economist C. Fred Bergsten points out, “[N]ew record levels of trade and current account deficits would likely levy very heavy costs on the United States whether or not the rest of the world was willing to finance these deficits at prices compatible with U.S. prosperity” (Bergsten 22). The crux of our deficit debacle is the willingness of foreign nations to finance our fiscal shortcoming. As soon as nations such as Russia and China decide to call their loans or no longer finance American debt, our economy could crumble. It is for this reason that the famous economist (and former chairman of the Federal Reserve) Alan Greenspan calls for an elimination (or, at the very least, a substantial reduction) of the trade deficit (Greenspan 353). Josh Bivens of the Economic Policy Institute references the fact that our present trade deficit not only causes a loss of jobs but a reduction in wages. While many governmental leaders and economic analysts agree that reducing the deficit is worthy of our time and effort, they like to point out that the importation of raw materials is a leading cause of our trade deficit and thus should not be substantially reduced. The problem is that the goods we export are not equal in value to our imports – even with the appreciation of raw materials to finished products. According to the experts in economics and public policy, an elimination of the trade deficit will result in a stronger, healthier, more resilient, and more manageable domestic economy.

Analyzing domestic economy addresses only one side of the coin. The U.S. is part of a larger whole (the world) and this ought to be factored into its economic policy making. Granting that domestically speaking, BT would create a better economy, one must examine the international effect before supporting it as a viable trade model. According to leading economist C. Fred Bergsten, “[I]f the United States stopped running large trade deficits and acting as the consumer of last resort, many countries would be forced to rebalance their growth strategies to expand domestic demand instead of relying on exports” (Bergsten 23). Using the phraseology “forced to rebalance their growth strategies” does sound like a negative effect. But put in more positive terms, the macroeconomic effect of reducing the United States trade deficit would be a balancing of other nations’ trade as well. Nations that currently rely on the U.S. demand for goods to supply their economy will need to create self-sustaining economies that aid the larger whole and increase international production. Summarizing the effects of BT, it seems that its adoption would be massively beneficial for the U.S. and the world as a whole.

Turning the page in the book of trade models, we now come to Free Trade (FT). As discussed above, FT has a long and storied history as the predominate trade model for centuries (if not millennia). At the most basic level, nations that adhere to the FT model enter into agreements that drastically reduce (or eliminate) tariffs on imports and exports in order to increase the flow

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of goods between trading partners. Such agreements follow a reciprocity rule such that Nation A must make some concession for Nation B to make a concession. In the end, both nations end up with advantages and disadvantages. Price-raising tariffs are limited (as are subsidies) but businesses experience increased market competition (which can reduce profits). Suppose that the U.S. wants to create an FTA (FT agreement) with India. Both nations have areas of specialization in which they can produce goods cheaper and more efficiently than all other nations (U.S. in luxury goods and India in textile goods). It would be in America’s interest to gain cheap textiles from India and in India’s interest to boost the national standard of living by having access to American luxury goods. Both nations head to the negotiating tables and agree to some form of standards for tariffs (or a complete removal of them). As any and all trade officials will admit, negotiating FTAs is incredibly difficult. There can be complications in every step of the process at every level of governance. Given the intricacies necessary to closing an FTA, it would seem that they should be a last resort for policymakers.

In reality, FTAs and the FT model as a whole do have a prevalent presence in the modern world. The World Trade Organization (which grew out of the General Agreement on Tariffs and Trade – GATT) seeks to level the playing field at the multilateral level (Mendoza and Bahadur 21-62). Its main prerogative is to reduce tariffs and domestic subsidies so that developing nations have equal access to developed markets. Once this is achieved, global economic equality is upheld. Put simply, the WTO seeks to become the epitome of the FT model. Furthermore, there are a host of FTAs in play around the globe. The U.S. alone has around twenty agreements in effect and even more on the negotiating tables. The Euro-Zone (the section of the EU that uses the euro as its currency) is essentially one large FTA zone. Indeed, the FT model is the most frequently employed model.

It is important to note that not all FTAs are equal. Because of this, the debate about the benefits (or supposed benefits) of FT still rages in political and economic circles. Theoretically, FT ought to benefit the larger economy (macroeconomics) but devastate local economies (microeconomics). As Smith was quoted above, the “recipient” nation is benefitted while the “donating/favoring” nation is harmed (Smith 419). Suppose that the above U.S./India FTA were to be completed. The textile industry in America would be forced out of business – the imported Indian goods being cheaper than anything the American firms could create. The jobs, cash flow, and productivity created by the U.S. textile industry would be lost. At the same time, the U.S. would gain cheaper textile goods – a staple in all American households. The question is whether or not the cheaper textile goods cause an increase in the purchasing power of American families that outweighs the losses in the textile industry.

Nearly all economists are camped on one side of this debate, according to Nobel Prize winning economist Jagdish Bhagwati and Columbia University professor Arvind Panagariya. They report, "The fact of the matter is that nearly all scholars of international economics today are fiercely skeptical, even hostile to such agreements." There are many compelling reasons why so many economists are opposed to FTAs (also known as “trade liberalization”). The most important of these, according to Joseph Stiglitz in the Far Eastern Economic Review, is the fact that FTAs are ineffective with developing countries – the majority of nations we trade with. He writes:

The fact of the matter is that the economics of trade liberalization are far more complicated than political leaders have portrayed them. There are some circumstances in

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which trade liberalization brings enormous benefits-when there are good risk markets, when there is full employment, when an economy is mature. But none of these conditions are satisfied in developing countries.

In other words, economically speaking, unless a nation has nearly full employment (which is all but impossible without communism), FT will harm the workers and general economy of the nations party to FTAs. Such harm is caused in many ways. It is a known fact that FTAs cause a loss of jobs (it has been observed in every FTA the U.S. has negotiated); as the above quotation states, if jobs are lost and there is an inability for displaced workers to gain new ones, the economy suffers greatly. Additionally, as William Overholt (policy analyst at RAND) points out, “The true part is that within many countries, globalization has enhanced the wealth of business owners and managers while providing proportionately less wage growth for ordinary workers . . . millions of workers in the U.S. and Western Europe now face more competition than ever before from others willing to work for far lower wages.” Not only are many jobs lost, but the remaining workers face extreme competition for their services on the international market – with others willing to work for a fraction of the cost. Equalizing trade across state boundaries makes sense – geographic similarity, relatively equal costs of living – but generalizing trade across oceans and continents causes a disturbing depression of economic functions globally.

Analysts have seen this come true in two specific examples. The first is the quasi-FTA the U.S. negotiated with China in 2000. As Economic Policy Institute authors Jeff Faux and Andrea Orr report, “In 2000 the United States government opened up the U.S. market to China . . . In exchange, the Chinese loosened restrictions on U.S. investment in China . . . The results—lost jobs, lower wages, chronic trade deficits, and a huge and growing foreign debt—should have been no surprise.” A large part of America’s current predicament is directly due to the quasi-FTA it negotiated with China more than a decade ago.

Additionally, the North American Free Trade Agreement (NAFTA) has been the subject of extensive scrutiny and study. There is nearly a consensus that the effects of NAFTA have been detrimental to the economies of all the parties involved. Robert Scott of the Economic Policy Institute reports that the U.S. lost a net total of nearly 900,000 jobs due to NAFTA (see Appendices A and B for tables discussing this subject). Empirically, FT has caused massive economic harm so it seems strange that so many nations hold to it as the preferred model of trade. McKeever asserts, “The most basic and honest answer to why the US is pursuing a Free Trade policy is that trade policies are determined by economic interest and economic interests trump rationality in the political arena” (Interview). According to McKeever, the power players in American politics that benefit from FT (corporations and massive domestic firms) lobby effectively enough to keep the FT model as the operative model in U.S. trade – it “trumps rationality” (Interview).

This analysis only investigates half of the debate (those against FT). There is an equally persuasive position that supports FT because of the benefits it creates outside of the economy. The vast majority of FT proponents point out that negotiating FTAs can lead to increased commerce in underdeveloped countries and increased leverage in human rights issues and environmental standards. Expanding beyond the realm of economics, it seems that FT has very real benefits to foreign policy in general and promoting U.S. interest. Returning to economic analysis, there are a few economists who support FT. Among these are Mendoza and Bahadur. They assert that the net increase of producers and consumers that results from FT creates a

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positive environment that increases the robustness of the international economy (25). Referencing the concept of specialization explained above, Mendoza and Bahadur claim that if countries focused only on their specialty (utopian specialization), net global production would increase (25). Economically, it makes sense that utopian specialization would increase global production, assuming costs and elimination of all tariffs and market preferences. Such policies, according to Antoine Bouët writing in the Food Policy Review, would increase global income by $100 billion in a matter of ten years. In the grand scheme of things, $100 billion is quite small when spread globally, but is still a number worth considering. Overholt points out that this minimal increase in global income is due to the lowering of prices. In reality, there is no increase in wages, just a decrease in prices. Such a decrease allows consumers to purchase more per dollar – raising real income as opposed to wages (Overholt). In addition to income, as Arthur M. Wiese adds, there is an increase in international competition. He writes, “A trade policy that moves toward an unfettered flow of goods, services, and capital across national borders is in a country’s long run interest. Though an open trade policy results in increased imports and job displacement in some sectors, it also facilitates the creation of export supported employment in other higher value-added sectors” (58). While Wiese admits that a number of jobs are lost due to FT, he argues that a FT structure would create more jobs and increase wealth in such a way that outweighs the downward pressure. In the end, then, it seems possible (if not likely) that FT has a net positive effect on both domestic and international economies.

With the specific structures analyzed and the supporting and dissuading evidence having been provided, a final analysis is in order. McKeever’s Balanced Trade focuses on bolstering domestic economy. It holds that prioritizing the domestic structure will, in the end, strengthen the larger whole. Because it uses strong economic theory (principles that are all but economic law), implementing the model will stabilize and enhance the domestic economy by increasing net wealth (both goods and cash flow). BT’s elimination of the deficit will result in a much more resilient economy, an increase in jobs, and steady economic growth (as nearly all economists concede). By design, BT has the same macro- and microeconomic effect – strengthening of national economies in such a way that strengthens the international economy. BT has the support of strong economic theory and empirical examples.

The results of a final analysis of Free Trade are not as encouraging. It is true that FT increases political soft power and promotes American political interest, which is indeed a considerable point to weigh. Furthermore, FT fulfills the macroeconomic ideal of a true Competitive Market Structure (CMS – a multitude of firms offering similar products and competitive prices to a multitude of consumers in a large market). Because of the strong CMS created, an increase in specialization and global production is extremely likely and the increase of global income Overholt cites is probable. Still, these benefits, though strong, come at a high cost. The overwhelming majority of economists assert that crippling sectors of the domestic economy (as seen empirically with China and NAFTA) and decreasing wages due to the increased competition of international labor markets harm economies to the point that FT cannot be considered a viable trade model. All the supposed benefits of FT have not been seen – only speculated - while the negative effects have been actualized. In the end, FT is highly successful on a smaller scale (state-level) but sweeping international FT is necessarily impractical. The different cultures, value structures, and political practices between nations create such stark contrasts between markets that true FT is rendered impossible. Furthermore, the benefits of FT

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are only seen if it is applied across the whole globe – not just between a few nations – and such an occurrence is more than unlikely.

Outside economic and political considerations, application of the traditional American value structure must be included in a full analysis of trade models. Historically, U.S. citizens have held a strong aversion to international debt. This is due to the belief that American debt weakens both the national image and global political power. The trade deficit is one of the largest elements of debt the U.S. has (as the media consistently points out). Political policies that are sure to increase deficits are typically unsupported while policies that reduce debt (especially the deficit) garner higher public advocacy. Factoring this into the above analysis, it still seems that BT holds both a practical and fiscal advantage over FT in America.

Environmental concerns have also wound their way into trade policy. Deborah James, writing in the book, Opposing Viewpoints: Global Resources, proves that reducing tariffs on natural resources will increase their exploitation. Furthermore, FTAs harm the environment by increasing dependency on foreign oil, increasing greenhouse gas emissions, and bypassing international environmental standards (James 190-198). Given the national attitude toward the environment, BT is again given an advantage over FT in political viability.

As America has developed, trade has maintained its role as the crux of its economy. Though its consideration in the public square is minimal, selecting an advantageous and expedient trade model lies at the core of righting the economic wrongs in America. Taking into consideration economic theory, empirical examples, political ideology, and other important topics, Balanced Trade offers a more advantageous and viable trade model for America. Though its followers are few, its values are widely held. Upon proposition to the American public and political actors – given the analysis conducted in this paper – I firmly believe that the people, the government, and international economists would favor McKeever’s Balanced Trade over the traditional model of Free Trade.

Journeying back to grade school, when one might swap a turkey and ham sandwich for a neighbor’s peanut butter and jelly, the principles of BT are easily seen: the two parties find equally valued items and trade one for the other – no deficits and no surpluses. FT would cause the lunchroom economy to crumble – one ought not to receive a sandwich on the promise of bringing an extra tomorrow. From grade school sandwich swapping to trillion-dollar economic agreements, Balanced Trade creates the most advantageous and efficient model. Such economic advantages and politically viable actions ought to become the new norm in international trade policy. The first step becomes sharing such information through projects like this.

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Appendix A: NAFTA Job Creation/Destruction Totals

Source: Scott, Robert. “The High Price of ‘Free’ Trade.”

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Appendix B: NAFTA Job Creation/Destruction By State

Source: Scott, Robert. “The High Price of ‘Free’ Trade.”

Works Cited:

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Bernero, Virg. “Free Trade Has Sold Out The American Worker.” CNN Politics. CNN, 9 Feb. 2009. Web. 18 Feb. 2013.

Bivens, Josh. “Trade, Jobs, And Wages.” Economic Policy Institute Reports. Economic Policy Institute, 6 May. 2008. Web. 20 Mar. 2013.

Bouët, Antoine. “The Expected Benefits Of Trade Liberalization For World Income And Development: Opening The ‘Black Box’ Of Global Trade Modeling.” Food Policy Review. International Food Policy Research Institute, 2008. Web. 1 Mar. 2013.

Buffett, Warren E., and Carol J. Loomis. “America’s Growing Trade Deficit Is Selling The Nation Out From Under Us. Here’s A Way To Fix The Problem – And We Need To Do It Now.” Fortune Magazine. CNN Money. 10 Nov. 2003 Web. 20 Feb. 2013.

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---. Telephone interview. 11 Mar. 2013.

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---. “Is The U.S. Trade Deficit Really Bad News?.” CATO Institute Commentary. CATO Institute, 15 May. 1998. Web. 26 Feb. 2013.

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---. Telephone interview. 1 Mar. 2013.

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Copyright, 2013 by Jared L. Rixstine, Decatur, IL. This text can be posted in any electronic forum or used for academic endeavors. For publication in printed form, please request permission from the author: email: jrixstine@millikin.edu; Telephone 309-265-1660.