International Econ: Thoughts

So, I may be a complete dork, but I am absolutely loving my International Economics course right now. I think it's one of those classes that everyone should have to take because it's so so so relevant!

Today we were looking at the current percentage changes between the US Import Price Index and the US Export Price Index and talking about some of the reasons that we're paying 7% more to import goods than we were last year, and the problems with the fact that we've only seen a 4.4% increase on the prices we get for our exports. (Basically we're paying more for what we're buying than what we're selling.)

These issues are in the news all the time - questioning whether the US has a trade advantage, whether the US is losing out in the world market, losing absolute advantage in markets we used to dominate, etc. It was so interesting to see it broken down and actually look at the numbers, and then try to answer Prof. Raman's question: so as a policymaker what would you do about this trade deficit?

We talked about long term efforts like increasing production, value or quality of goods, to increase the demand for US products. Or the more interesting one to me was by changing policy to balance out trade...taking the example of trying to cut down our demand on gas so that we were importing less. To do this, policymakers could establish a larger gas tax (which would never happen, i.e. Republicans, automotive industry/oil corporation lobbyists), or actively encourage the building of public transportation infrastructure (which won't happen anytime soon because it's soooo expensive), or put a tax on various vehicles (ha! i laughed at that one, the automotive industry would be in an uproar!)...

It was interesting 1) because I love the intersection between economics and politicts and 2) more depressingly, how soon we got to the conclusion that it couldn't happen. And not because of the political situation in Washington, but because of the lack of an American consensus or demand for alternatives to oil. The class, overall, basically saw Americans as the stereotypical tied to their SUVs/pickup trucks/gas-guzzling machines, unwilling to promote public transportation or to have any inconvience. Prof. Raman suggested that the answer may simply lie in just letting the gas prices continue to rise, with the idea that if people's pocketbooks tighten enough they'll demand something different.

And while I guess that's true, it seems awfully pessimistic. One about the nature of the American people. And two about our nation's leaders. Isn't one of the responsibilities of our nation's leaders to help guide the consensus ? To stand up and argue for what is best for our country, especially economically!?! I mean these are issues that even Republicans and Democrats can get together on, because not only are their economic and environmental issues at stake, but political issues as well. Why can't the consensus be changed before we get so broke that we can't afford gas? or before we use of the world's oil resources?