Academic journal article Journal of International Business Research

Trade Equilibrium: A Multi-Generational Economic Policy

Academic journal article Journal of International Business Research

Trade Equilibrium: A Multi-Generational Economic Policy

Article excerpt


This paper has the following objectives:

1. A brief statement of the mounting economic problems in America.

2. A brief review of the American efforts to deal with these problems; with a particular attention to the American Jobs Acts of 2004 and 2009.

3. A brief survey of literature to present what different scholars have said about various American economic problems and what could be done to deal with them.

4. A discussion of this author's theory of trade equilibrium and how it can help America not only protect its current jobs, but also help it create millions of new jobs-as it helps America wipe out its trade deficit.

It is an article for public policy using an academic framework. I have been writing about this topic for the past several years (see References for details). A mountain of data cited in here have been checked and rechecked for accuracy and logic. The author regrets the confusion these data may create for the readers. The writing sequence of the article follows its statement of objectives for better understanding.


The American economy, in spite of several efforts to improve it, continues to worsen in terms of its budgets, its national and foreign trade, its national and foreign debts, and its employment as shown by the following data.

National Debt

The total American national debt has two parts: (a) the public debt (it consists of government securities held by the public) and (b) the foreign or intra-governmental debt (it consists of the American governmental securities held by the foreigners). Here are some numerical data on the American national debt:

1. As of February 2011, the U.S. debt held by the public was $9.6 trillion and the intra-governmental (foreign) debt was $4.6 trillion, for a total of $14.2 trillion.

2. As of November 30, 2012, debt held by the public was approximately $11.553 trillion or about 72% of GDP. Intra-governmental holdings stood at $4.816 trillion, giving a combined total debt of $16.369 trillion. (Wikipedia).

3. As of January 2013, $5.6 trillion or approximately 47% of the debt held by the public was owned by foreign investors, the largest of which were the People's Republic of China and Japan at just over $1.1 trillion each. (Wikipedia).

Trade Deficits: Annual

America had a negative trade balance of $397 billion in 2001, $801 billion in 2006, $382 billion in 2009, and $475 billion in 2012. Its cumulative total negative trade balance jumped to $4.846 trillion on April 2, 2013.

Cumulative Job Losses Due to Foreign Debt

Since America loses about 3 jobs per $1 million of net imports, it lost about 14.54 million jobs while accumulating the trade deficit of $4.846 trillion, noted above, over the years.

Number of Americans Employed and Unemployed

Here are some numbers:

1. The U.S. total number of non-farm employees stood at 131.51 million in 2004; as compared to 133.74 million in 2012 (a minor increase).

2. Its employment to population ratio (for 16 years and over) declined from 62.4 percent in 2004, to 58.6% in 2012. This trend could worsen with technology induced productivity enhancements.

3. Its number of persons not in the labor force increased from 76 million in 2004 to 88 million in 2012 (for various reasons including non-availability of jobs, retirement, etc.).

In other words, since 2004 the number of Americans with jobs has declined, and the number of people without jobs has increased. Consequentially, a declining number of Americans with jobs are supporting an increasing number of fellow Americans without jobs. Millions of people, including children, live under poverty.


America has been trying to improve its economy, its fiscal situation (revenues minus expenses) and jobs for its citizens in many different ways. …

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