Dei'ah veDibur - Information & Insight

A Window into the Chareidi World

22 Cheshvan 5766 - November 23, 2005 | Mordecai Plaut, director Published Weekly










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Shema Yisrael Torah Network

Opinion & Comment
A Moral Analysis of the US Economy

In September, the US imported $66 billion more than it exported. If things continue the way they have been going in the first nine months of the year — and there is every expectation that they will — then the US will import a total of $706 billion more than it exports. It will almost certainly break the record that was set last year: $617 billion. Since the US economy is $12.5 trillion, this is less than six percent of the total. But it is still a lot of money.

Economists debate vigorously whether this is bad, or how bad it is. Some say that since America is the dominant country it can get away with buying more than it sells. Some argue that the world is fundamentally different and now trade deficits — and budget deficits — do not matter. As long as the US is an attractive place to invest, and in any case more attractive than anywhere else, people and governments will continue to send their investment money to finance the deficits.

Others argue that America's dominant position allows it to get away with things for much longer than anyplace else, but eventually things will have to balance out. They cannot argue that it has not been going on successfully, but they do argue that eventually something will happen to force the debt to be repaid in one way or another. The most likely way that it will be repaid is through inflation, meaning that the value of the dollar will fall. It fell almost 40 percent from its highest point reached four years ago, but it has since gained back more than 10 percent of the fall. However, if it is to correct the obvious trade imbalance, it will have to fall quite a bit more.

However, the only sides that seem to be considered are the economic sides. It seems to us that it is also important to consider the morality of the issue.

As big and as vigorous as it is, the United States is not pulling its weight. It is living off of others' work.

This does not apply to each and every individual, but on the whole the US is consuming more than it produces. Experience has shown that this can probably go on a lot longer than most people think it can, but it cannot go on indefinitely.

The problem is compounded by the fact that the US government itself is spending more than it takes in. At around $400 billion a year, the US government budget deficit is about 3.5 percent of its GDP. This is not expected to go down over the next decade.

When the US lawmakers pass new laws, they do not seem to be concerned about this. Recently the US Congress passed a law called the Transportation Act. Its total expected cost is $286 billion. This is more than $30 billion more than was originally proposed. The reason for this is that it included 6,371 special projects that were put in by members of Congress. A group called Citizens Against Government Waste estimated that almost 14,000 programs were passed this year that are so-called "pork barrel" programs since they address the special interests of individual members of Congress.

We do not presume to give advice on the economics of the matter. Economists themselves are divided over whether the economics are the same as they always have been and this behavior will eventually lead to an economic bust, possibly only hitting the next generation, or if things have changed fundamentally and this situation is sustainable.

We know, however, that morality has not changed. What was morally wrong yesterday is morally wrong today and will be morally wrong tomorrow.

Trade deficits, budget deficits and uncontrolled spending are morally unhealthy and they should be stopped.

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