The History of the US Trade Deficit

The History of the US Trade Deficit One measure of a countrys economic health and stability is its balance of trade, which is the difference between the value of imports and the value of exports over a defined period. A positive balance is known as a trade surplus, which is characterized by exporting more (in terms of value) than is imported into the country. A negative balance, which is defined by importing more than is exported, is called a trade deficit or a trade gap. A positive balance of trade or trade surplus is favorable, as it indicates a net inflow of capital from foreign markets into the domestic economy. When a country has a surplus, it also has control over the majority of its currency in the global economy, which reduces the risk of falling currency value.  Although the United States has always been a major player in the international economy, it has suffered a trade deficit for the last several decades. History of the Trade Deficit In 1975, U.S. exports  exceeded imports by $12,400 million, but that would be the last trade surplus the United States would see in the 20th century. By 1987, the American trade deficit had swelled to $153,300 million. The trade gap began sinking in subsequent years as the dollar depreciated and economic growth in other countries led to increased demand for U.S. exports. But the American trade deficit swelled again in the late 1990s. During this period, the U.S. economy  was once again growing faster than the economies of Americas major trading partners, and Americans consequently were buying foreign goods at a faster pace than people in other countries were buying American goods. The financial crisis in Asia sent currencies in that part of the world plummeting, making their goods much cheaper in relative terms than American goods. By 1997, the American trade deficit  hit $110,000 million and heading higher. Trade Deficit Interpreted American officials have viewed the U.S. trade balance with mixed feelings. Over the last several decades, inexpensive imports  have aided in the prevention of inflation, which some policymakers once viewed as a possible threat to the U.S. economy in the late 1990s. At the same time, many Americans worried that this new surge of imports would damage domestic industries. The American steel industry, for instance, was worried about a rise in imports of low-priced steel as foreign producers turned to the United States after Asian demand shriveled. Although foreign lenders were generally more than happy to provide the funds Americans needed to finance their trade deficit, U.S. officials worried (and continue to worry) that at some point those same investors might grow wary. If investors in American debt change their investing behavior, the impact would be detrimental to the American economy as the value of the dollar is driven down, U.S. interest rates  are forced higher, and economic activity is stifled.

Milton Obote

Milton Obote Apollo Milton Obote (some say Milton Apollo Obote) was the 2nd and 4th President of Uganda. He first came to power in 1962 but was ousted by Idi Amin in 1971. Nine years later, Amin was overthrown, and Obote came back to power for five more years before he was ousted again. Obote has largely been overshadowed by â€Å"The Butcher† Idi Amin in the Western media, but Obote was also accused of widespread human rights abuses and the deaths attributed to his governments are greater than those of Amin. Who was he, how was he able to come back into power, and why is he forgotten in favor of Amin? Rise to Power Who he was and how he came to power twice are the easier questions to answer. Obote was the son of a minor tribal chief and received some university education at the prestigious Makerere University in Kampala. He then moved to Kenya where he joined the independence movement in the late 1950s. He returned to Uganda and entered the political fray and by 1959 was the leader of a new political party, the Uganda People’s Congress. After independence, Obote aligned with the royalist Bugandan party. (Buganda had been a large kingdom in pre-colonial Uganda that remained in existence under Britain’s policy of indirect rule.)   As a coalition, Obote’s UPC and the royalist Bugandans held a majority of seats in the new parliament, and Obote became the first elected Prime Minister of Uganda after independence. Prime Minister, President When Obote was elected Prime Minister, Uganda was a federalized state. There was also a President of Uganda, but that was a largely ceremonial position, and from 1963 to 1966, it was the Kabaka (or king) of Baganda that held it. In 1966, however, Obote began purging his government and orchestrated a new constitution, passed by the parliament, that did away with both the federalization of Uganda and the Kabaka. Backed by the army, Obote became President and gave himself wide-sweeping powers. When the Kabaka objected, he was forced into exile. The Cold War and the Arab-Israeli War Obote’s Achilles heel was his reliance on the military and his self-proclaimed socialism. Soon after he became President, the West looked askance at Obote who, in the politics of  Cold War  Africa, was seen as a potential ally of the USSR. Meanwhile, many in the West thought that Obote’s military commander, Idi Amin, would be a wonderful ally (or pawn) in Africa. There was also a further complication in the form of Israel, who feared that Obote would upset their support of Sudanese rebels; they too thought Amin would be more amenable to their plans. Obote’s strong-arm tactics within Uganda had also lost him support within the country, and when Amin, aided by foreign backers, launched a coup in January 1971, the West, Israel, and Uganda rejoiced. Tanzanian Exile and Return The rejoicing was short-lived. Within a few years, Idi Amin had become notorious for his human rights abuses and repression. Obote, who was living in exile in Tanzania where he had been welcomed by fellow socialist Julius Nyerere, was a frequent critic of Amin’s regime. In 1979, when Amin invaded the Kagera strip in Tanzania, Nyerere said enough was enough and launched the Kagera War, during which Tanzanian troops pushed Uganda troops out of Kagera, then followed them into Uganda and helped force the overthrow of Amin. Many believed that the subsequent presidential elections were rigged, and as soon as Obote was inaugurated President of Uganda again, he was facing resistance. The most serious resistance came from National Resistance Army led by Yoweri Museveni. The army responded by brutally suppressed the civilian population in the NLA’s stronghold. Human rights groups put the count at between 100,000 and 500,000. In 1986, Museveni seized power, and Obote fled into exile again. He died in Zambia in 2005. Sources: Dowden, Richard. Africa: Altered States, Ordinary Miracles. New York: Public Affairs, 2009. Marshal, Julian. â€Å"Milton Obote,† obituary,  Guardian, 11 October 2005.