Balance of Payments
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The balance of payments system is the net total of imports and exports along with loans exchanged between countries (Daniels, et al, 2013). Being that we are a predominately service based country, the United States relies heavily on foreign trade to sustain our economy. Unfortunately for the past 25+ years, the United States has taken in exceedingly more imports than it has been able to export. The table (attached to the end of this paper) from the US Census Bureau, Foreign Trade Division (2012) shows the balances of payments from 1960 until 2011. According to this table we can see a steady increase in our trade account deficit over the past 25+ years. 2011 closed with a deficit of -$738,413 million. Serious changes need to be considered to improve this current trade deficit.
There are several ways to improve the negative trade deficit. One major way the United States can improve the trade deficit would be to import less and produce more “in-house.” This can be done on a variety of products such as gas, food, automobiles and more importantly medications. Health care has been the center of great debate over the past few years. One of the areas of growing concern is the increasing cost of medical supplies and medications. The United States is able to import drugs from India (Daniels, et al, 2013), where it is cheaper to produce but they continue to increase the cost once they are in the United States. Another foreign-based company we gain a lot of supplies and medications from is GlaxoSmith Kline (GSK) which is based in the United Kingdom (Daniels, et al, 2013).
According to Daniels, et al, there is a high cost associated with producing medicine in developed countries as opposed to under developed locations. If medical companies had to pay higher taxes on the importation of these drugs, I feel they would look for other ways of producing medications locally. The Food and Drug Administration already approves which drugs are able to be used within the United States. They should be in charge of monitoring the medications and supplies that are produced in the US too. According to the Federal Trade Commissions (FTC) website (consumer.ftc.gov, 2012), their mission states:
“To prevent business practices that are anticompetitive or deceptive or unfair to consumers; to enhance informed consumer choice and public understanding of the competitive process; and to accomplish this without unduly burdening legitimate business activity.”
Under the FTC is the Bureau of Consumer Protection, which can be held responsible for the ethical pricing of medication and medical supplies produced. Between these two agencies, this will place more emphasis on offering lower cost medications and supplies that are of both good quality and standards.
The Congress should set specific guidelines in this matter that the Food and Drug Administration and the Federal Trade Commission would be required to follow and enforce.