Published Monday, January 22, 2007 by Robert P. Murphy
The man on the street passionately believes that we ought to sell more stuff to foreigners than we buy from them, writes Robert Murphy. But he also believes quite strongly that it's good if foreign companies build factories here, rather than Americans exporting capital abroad. So when we free market economists point out that the two positions are mutually exclusive, that at least causes the protectionist to scratch his head. Remember: a positive trade deficit must yield a positive capital account surplus, i.e., a net inflow of foreign investment in US assets.
(Original Text)
Isn't the Capital Surplus a Good Thing? (2.67 MB)