Although politicians, pundits, and the media claim that a trade deficit is harmful to a country, the reality is much different. In a free economy, individuals interact with each other in mutually beneficial exchanges. As Murray Rothbard noted, free exchanges do not produce winners and losers.

While an individual’s balance of payments conveys exhaustive information about his social position, a group’s balance discloses much less. It says nothing about the mutual relations between the members of the group. The greater the group is and the less homogeneous its members are, the more defective is the information vouchsafed by the balance of payments.