HBR blog network, November 9, 2012
As America turns its attention to the "fiscal cliff," the proposals on the table look at solutions that will either shrink the economy (e.g. cutting expenses and raising taxes) or make it stagnant (e.g. reduce tax rates but recover the revenue from fixing deduction loopholes).
Are there ways to expand the pie, instead? Here's one idea: turn the trade deficit into a trade surplus.
The trade deficit is goods and services we have consumed but have been provided by other countries. Over the last 10 years, the trade deficit has been between $400 billion a year and $800 billion a year.
For the purposes of this thought experiment, let us assume an average trade deficit of $600 billion a year. If every company had to pay a tax for the "deficit" they caused, and got a tax credit for the "surplus" they contributed; the goals and aspirations of entrepreneurs, businessmen and industrialists will be aligned with those of the country...