Regarding the discussion that started this thread I was pleasantly surprised to see Walter Williams revisiting this subject today and even repeating his "grocer trade deficit" example! You might want to look at Walter's column because it sheds a lot of light on several of the subjects discussed in this thread - http://jewishworldreview.com/cols/williamns030712.php3
Another case of using a truism to deflect a criticism that doesn't accurately reflect a cause and effect relationship.
Manufacturing productivity has doubled since 1987, and manufacturing output has risen by one-half. However, over the past two decades, manufacturing employment has fallen about 25 percent. For some people, that means our manufacturing sector is sick.
The bottom line is that the health of an industry is measured by its output, not by the number of people it employs.
On their face the above two quotes are correct. The problem lies in how output is gauged. The graphs Nightmonkey and I posted earlier show manufacturing output in gross dollar value of shipments. But, and it's a big but, how much of that output reflects the value of goods purchased from overseas and incorporated into the final shipped product? According to this chart http://extras.mnginteractive.com/live/media/site36/2010/0814/20100814_105542_Carsbypercent1.pdf
linked from here http://www.denverpost.com/business/ci_15775230
the domestic content is as low as 50% for the Ford Explorer/Lincoln Navigator. So if a $50,000 vehicle has 50% foreign content it shows up as contributing $50,000 to American manufacturing output when in reality it's only contributing $25,000!
Another quote from Walter that is problematic.
Suppose Sony doesn't buy any wheat, corn, cotton or cars from Americans. People are tempted to say that there's a trade deficit. Not true. Instead of using that $1,000 to buy goods from us, Sony might purchase stocks and U.S. Treasury bonds from us — in other words, invest in America.
What does invest mean? It means gaining ownership in the form of stocks, or gaining lender's power in the form of bonds. If you have no problem with the possibility that China may eventually own US Steel, Home Depot, Ford, John Deere, Caterpillar, Krogers, Consolidated Coal, and who knows who all, then I suppose buying their products in exchange for ownership of our assets is OK. And if you are not concerned that someday China may own $50 trillion worth of US Government bonds, and thus have a hammer over our entire economy and tax structure, then I suppose it's OK. But I don't like either one of those potential outcomes.