Free Trade, Fair Prices, and Sustainable Deficits

The recently approved economic stimulus package will put many people back to work in government-financed jobs and will bolster the sagging finances of state and local governments, concedes the author. But he argues that a successful, sustainable economic recovery will require making U.S. products more competitive internationally and reducing our trade deficit. Doing this could restore a major share of the 8 million jobs that have been lost largely to an overvalued dollar. In his piece, he examines the reasons that traditional protectionist approaches to restoring trade balances are not desirable, and he proposes a foreign currency transaction tax instead.