The other day a reader asked me what is the alternative to export? Well, in economics, it is better to receive than to give. Therefore, as taught in 1st year economics classes:
Imports are real benefits. Exports are real costs.
In other words, going to work to produce real goods and services to export for someone else to consume does you no economic good at all, unless you get to import and consume the real goods and services others produce in return. Put more succinctly: The real wealth of a nation is all it produces and keeps for itself, plus all it imports, minus what it must export.
Consider the following. Quite recently, our country bought 3 new offshore patrol boats - KDB Darussalam, KDB Darulaman and KDB Darulehsan from a German company, Lurseen Werft. Now if we look at the transaction, we, Brunei raised millions of Euros and wired it to Germany. In return, Lurseen Werft sweated it out for 3 years in building the vessels for Brunei. With the new vessels, our country are now better protected.
Does it take much effort for Brunei to raised the needed Euro? Honestly, I do not know. However, had our government understood what it meant to be a monetarily sovereign in the first place, I doubt it was a difficult endeavor. All our country needs was to create the necessary Brunei dollar and exchange them for the necessary Euro. Just like us going over to Miri or Limbang where we exchange our Brunei dollars for Malaysian ringgits. Does it require much effort? I don't think so.
But some of you might say, if we import so much, there shall be huge unemployment in our country. To me, our country can ALWAYS support domestic output and sustain domestic full employment with fiscal policy (tax cuts and/or govt. spending), even when Germany, or any other nation, decides to send us real goods and services that displace our industries previously doing that work. All we have to do is keep Bruneian spending power high enough to be able to buy BOTH what foreigners want to sell us AND all the goods and services that we can produce ourselves at full employment levels. Yes, jobs may be lost in one or more industries. But with the right fiscal policy, there will always be sufficient domestic spending power to be able to employ those willing and able to work, producing other goods and services for our private and public consumption.
A trade deficit, in fact, increases our real standard of living. How can it be any other way? So, the higher the trade deficit the better. The mainstream economists, politicians, and media all have the trade issue completely backwards. Sad but true.
