Flawed Leadership Led to Factory and Job Losses

Mr. Tom Gibson has a nice post on Cagle.com about comparative advantage.  His thinking goes like this:  When the US specializes and trades for the things that it cannot produce at a cheaper cost domestically, foreign countries enact trade barriers, give export subsidies so that their goods are relatively cheaper, increase domestic saving so that investment is high, America loses its competitiveness, and more US industries move off shore.

I'm not sure, but I think Mr. Gibson's commentary is directed at China.  I think he's right about some of the behavior of foreign countries, but I don't think his commentary is correctly placed.  I think that most of our trade deficit is from the middle east in the form of crude oil imports.

This quote is from Kimberly Amadeo, About.com.

America's dependence on foreign oil drives the trade deficit. In 2011, the U.S. imported $332 billion in petroleum-related products, compared to $252 billion in 2010. The number of barrels imported was slightly lower, but oil prices jumped from an average of $99.78/barrel to $74.67/barrel. Petroleum-related products include crude oil, natural gas, fuel oil and other petroleum-based distillates such as kerosene. (Source: U.S. Census, U.S. Oil Imports)

Also from her article,

The U.S. trade deficit is when the total goods and services the U.S.imports is greater than the total it exports. In 2011, the total U.S. trade deficit was $559.956 billion. This was $2.1 trillion in exports minus $2.67 trillion in imports. This shows the economy is strengthening, since it is more than the $500 billion trade deficit in 2010. Still, it's much less than the record $753 billion trade deficit in 2006. (Source: U.S. Census, Most Recent Annual Trade Data. For more recent monthly data, see U.S. Trade)

It's clear that much of our trade imbalance is the result of our dependence on foreign oil.

Now I'm going to rant.  What Mr. Gibson wants is someone to protect him.  Kind of like a big brother.  Why can't America become competitive again by raising standards in school?  A recent Economist article shows that China's trade balance is zero.  I think the US should concentrate on nuclear power to eliminate reliance on foreign oil.  We would then have the comparative advantage in energy.