Trade surpluses are weird. I noticed this when I originally learned about them. Then I forgot this anomaly until…sigh…Eliezer Yudkowsky pointed it out.

Eliezer is, as usual, correct. In this post, I will spend 808 words explaining what he did in 44.

A trade surplus is what happens when a country exports more than it imports. For example, China imports more from Australia than Australia imports from China. Australia therefore has a trade surplus with China. Equivalently, China has a trade deficit with Australia.

In our modern era, every country wants trade surpluses and wants to avoid trade deficits. To recklessly oversimplify, having trade surplusses means you're winning at global trade, and having trade deficits means you're losing. This must be be looked at in context, however. For example, China imports raw materials from Australia which it turns into manufactured products and then sells to other countries. Because of [...]

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