Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Charleston Post Courier editorial advocates Buffett's Import Certificates to balance trade
Here's a selection from their excellent editorial:
Now the politics look improved for a response to China's currency game, in part because China has openly rebuffed President Obama's efforts to address the trade imbalance and toughen sanctions in Iran and North Korea.
Retaliation is a double-edged sword. American consumers benefit from the low Chinese prices for which American manufacturers suffer. Tariffs on Chinese imports would raise the cost of living for consumers, but help keep U.S. manufacturing jobs.
Tariffs are one approach worth considering. Warren Buffett, the legendary chairman of Berkshire-Hathaway, has proposed another approach to rebalancing the nation's foreign trade deficit that could address not only China but also oil imports, the other source of the nation's huge trade imbalance.
Buffett calls it the "import certificate" plan. The government would create "import certificates" for every dollar's worth of goods exported. Anyone who wanted to import goods would have to buy the certificates, presumably at a premium as long as import demand exceeds exports. Studies suggest the plan would be legal under world trade laws.
Whatever approach is finally taken, it is clear that the time has come to begin rebuilding the American economy by strengthening investment that creates American jobs. Addressing China's unfair trade practices is an essential part of this mission.
We also recommend Buffett's Import Certificates plan. Click here to read our discussion of Import Certificates in Chapter 4, "How to Balance Trade," from our 2008 book Trading Away Our Future.
Journal of Economic Literature:
Atlantic Economic Journal: