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So Why Aren’t We Broke?

Monday, May 10, 2010 11:51 am

We hear it all of the time – the United States has a negative balance of trade this month. The news has become so normal to hear that we just don’t seem to listen anymore. The United States as a nation buys more from foreign countries than we sell in return. It’s been happening for decades. So why aren’t we broke?

Balance of trade is one of several economic indicators determining the wealth and creditworthiness of a nation. The simple definition is: Balance of Trade is the difference between a nation’s exports and the nation’s imports. In February 2010, the United States’ Balance of Trade was almost a “negative” 40 billion dollars. That’s 40 billion dollars worth of goods, like appliances, automobiles, housewares, hardware, pet supplies and so on, more bought by Americans than made and sold to people around the world. This negative trade imbalance happens month after month, so why aren’t we broke?

It’s no surprise to anyone that many of America’s manufacturing jobs have gone to other countries. Economists contend that our labor costs are too high and that consumers demand low prices. High production costs and everyday low prices just don’t compute.

To bring this concept closer to home, if each one of us spent more than we earned month after month, year after year, we would go broke. That’s not a shocking economic revelation. So why haven’t we gone broke as a nation?

The answer is Intellectual Property rights consisting of: Patents, Copyrights and Trademarks. The rights bestowed to patent, copyright and trademark owners for the products being made in foreign countries generally are held by American companies. Therefore, the profits earned by the sale of American owned products that are made in other countries stay in the United States. These Intellectual Property profits more than offset the negative trade balance. In fact, because the products are being made less expensively, there are more profits being earned and kept in the United States.

So why aren’t we broke? America is not going broke because of the creativity and the ingenuity of American inventors and creators. The United States economy is the largest and strongest in the world because of the things we dream up and make. We’re the brains behind the brawn, and the brains win. Without patents, copyrights and trademarks our country would go broke.

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