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September 09, 2004 - 10:29 am

SNORKEL ECONOMICS

So my six-year-old daughter and I were discussing the trade deficit last night over her bath…

Seriously.

Both kids have been noticing the little “CHINA” or “MADE IN CHINA” labels on so many of their toys and our household items that they’re starting to ask questions. Last night while she was in the tub the girl asks me, “Mom, why is almost everything from China?”

“That’s kind of difficult to explain,” I answered.

“Could you try?”

“Well, I suppose so. People in China will work for not a lot of money, so stuff made by the Chinese is really inexpensive. People in our country expect to get paid a fair amount of money for what they make, so stuff made by Americans costs more. Now, if stuff from China is cheap and stuff from America is expensive, and you only have a dollar to spend, where would you buy more stuff from?”

“China?”

“Right. And why do you think the Chinese people don’t buy as much of our stuff as we do of theirs?”

“I don’t know.”

“Think about it for a minute. Remember what I told you about how much they get paid and how much we get paid.”

“Oh! Because they don’t have as much money.”

“Exactly. That’s called the ‘trade deficit’ and it’s up to 14 billion dollars now – and that’s just with China! The overall trade deficit is up to 56 billion dollars! It's a great example of something known as a 'vicious cycle' which means no one is likely to do anything to change it any time soon.

“Oh. Could I have my snorkel now?”

“Sure.”

~Samantha

recommended:
reading -The Future of Capitalism: How Today's Economic Forces Shape Tomorrow's World by Lester C. Thurow
viewing - Roger and Me
listening -"Money" by Pink Floyd

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