This is the Kato Daily Podcast for Thursday, April 28, 2011.

I'm Kila Brown.

The Trade Deficit is one of the most misunderstood concepts in all of economics.

Getting it right is of critical importance.

At a March Cato Institute Capitol Hill briefing, George Mason University economist Don

Pudro discussed the misconceptions about trade.

Hyatt wrote a famous essay entitled The Confusion of language in political thought.

I don't think there's any area of policy that

involves economics that has more confusing language

than does the trade area. The talk about exports is right up there is confusing like people think exports are good.

I mean to promote exports, to promote a policy that emphasizes exports like promoting a policy saying, you know,

vote for me, I'll have been policies that ensure that you work harder and harder and produce

more and more and getting less and less in return.

If it was put that way, people would say,

hmm, that doesn't sound so good.

But that really is what all this export promotion

amounts to, because people don't understand the economics

and they don't understand really what the term export means they don't understand what the word import really means as they connect to each other

No term is more misunderstood in this debate than the trade deficit.

And Scott kind of set me up.

I'm going to actually change a little bit what I intended to say

and focus a little bit on the trade deficit. Trade deficit sounds bad.

...