A+trade+deficit+with+a+babysitter

A+trade+deficit+with+a+babysitter - A trade deficit with a...

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A trade deficit with a babysitter An article written by Tim Harford on the 10th December, 2005. Published on Undercover Economist . The Undercover Economist – FT Magazine, 10 December 2005 Cheap foreign labour has recently made inroads into the economy of Family Harford. My wife pays a student, “Sally”, to look after the imperious Miss Harford for a few hours a week, so that my wife can get on with running her photography business. This is the simplest and most straightforward of transactions. My wife is happy, Sally is happy and even Miss Harford appears to approve of the arrangement. How strange that if it were judged by the conventional wisdom applied to trade negotiations by newspapers, pub pundits and even our own trade negotiator, this arrangement would be regarded as economic suicide on both sides. Family Harford runs a substantial bilateral trade deficit with Sally. A bilateral trade deficit is what you spend with a particular trading partner, less what you earn from them. We spend $100 a week on service exports from Sally, and we earn nothing at
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This note was uploaded on 11/23/2010 for the course ECONOMICS Econ 13 taught by Professor Georgesarraf during the Winter '10 term at UC Irvine.

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A+trade+deficit+with+a+babysitter - A trade deficit with a...

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