A simple solution to our trade imbalances

… Buffet proposed a simple plan to balance our trade. The government could issue “Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports.” The number of import certificates determines the level of trade imbalance or balance that we allow.

Each exporter would, in turn, sell the ICs to parties–either exporters abroad or importers here–wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.

The idea was sort of like cap-and-trade. Exporters would get a certificate for the value of their exports. The certificates allow anyone holding them to import that dollar amount of goods or services. So selling these certificates would mean extra cash to exporters, and would help them modernize factories, pay specialists and the other things needed to revive our in-country industries. Or the extra cash would let them sell for less, which would counter currency manipulation and other subsidies that other countries provide to their exporters.

There are a number of pluses and minuses, and Buffett goes on to list some of the negative effects of balancing trade. For one thing, prices would necessarily go up. But, of course, jobs and wage gains would return to our economy. …

http://ourfuture.org/20140501/balancing-trade-remember-the-buffet-plan

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