International Trade and Economic Instability

Abstract

In the last few years, the United States has developed a foreign-trade deficit of unprecedented magnitude, and, closely associated with the trade deficit, has become a huge international debtor. In Washington and on Wall Street, these developments are viewed as serious problems, representing both long-term weakness and current instability in the U.S. economy. Moreover, these international economic problems have presented workers in some industries with serious difficulties, as production has been replaced by imports and many people have lost their jobs. Even where jobs have not been lost, wages have been eroded by the ominous threat of "international competition. "

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