John Sarbanes: “For years mainstream economists and economic journalists explained away public concern over the U.S. trade deficit by…”

“For years mainstream economists and economic journalists explained away public concern over the U.S. trade deficit by arguing the true cause of the deficit was the huge U.S. Federal budget deficit and, more recently, low U.S. savings. Exactly the argument the Senator from New York has just made. However, a new study released today by the Economic Strategy Institute refutes these traditional explanations and argues they are no longer adequate to explain what is, in reality, a significantly more complex problem negatively affecting a wide variety of economic statistics, including aggregate demand, gross domestic product, the budget deficit, business-financed research and development, wage rates, and exchange rates. And then it goes on in effect to say that this traditional analysis is really simplistic; it doesn't really answer the situation. It is almost dismissive of any trade deficit problem. In fact, if you look at the movements here, there is not a direct correlation between the various factors the Senator talked about. I mean you have a decline in the goods trade balance here at the time the trade deficit is still going up.”