It seems like Bush thinks the US can eat itself out of trouble, once again trying to raise consumption. What exactly is the budget deficit of the US by now?

 It seems I need to clarify what I said.  I understand that sometimes people/industries/whatever get the short end of the economic stick, but it is that exact same comparative advantage you mentioned that allows two parties to reach mutually beneficial economic arrangements, effectively creating two winners.  

 Right now we are seeing massive economic growh out of China, not because their government is assisting the citizens all the way to prosperity, but because their trading of an abundant resource (cheap labor) has attracted all sorts of foreign investment.  I'm not defending the inhumane treatment of sweatshop workers, but those workers still earn significantly more than rural peasants, and haev the benefit of living in a modern city.  China grows, everyone else saves money on purchases, everyone wins.

Not everyone wins, because those jobs that migrate to China in favor of the cheap labor are losses to workers in other countries, like the US, like I said there are winners and there are losers, as a result there is a role for government to play, because having such a situation can result in increased disparity in wealth.  Not everyone wins, and the quickest way to end up with a backlash against globalization is to have a wave of people in your country turn against it because they feel their livelihood is at stake, the theory of collective action, the government acting as a sheild for these people will allow globalization to go forward unhindered, if people feel they are safe even if they lose their job, they have less incentive to protest.

http://money.cnn.com/2008/01/18/news/economy/worldgoaway.fortune/index.htm 

You want to avoid results like this then the governemnt has to insure people against the negative effects of the market 

 I have to disagree somewhat, because the types of jobs that chinese workers are doing are generally not the kind that American laborers performed, but which are most often done by machines.  Just look at the past couple of years:  Unemployment has been near all-time lows (though it probably won't stay depending on how deep the imminent recession goes), and our trade deficit has never been larger meaning we are buying lots of stuff from overseas.  

 I tend to vote pretty libertarian so I like the government to stay out whenever possible. 

 Not really there are a lot of factory jobs lost to overseas, even if some of the work was done by machines, the fact is there were many people who worked in those factories and when they left, so did the jobs for american laborers, now I dislike using the unemployment statistic because its such a false one, it only looks at people who are unemployed and still looking, if you are underemployed or have given up, you are not counted.  Yeah we are buying a lot of stuff overseas because they are cheap, but that doesn't deal with the rising income disparity where the lower income brackets are not improving their position.

The fact is the rich are getting rch and the poor are staying where they are, or even falling further behind, that's not a good system, and that is where the backlash against globalization is growing.  You may not like the government to get involved, but there are reasons why they need to be involved.  The negative effects if they stay out of it will be worse.

Wealth is part of a whole.

That is why we have recessions. Which are usually caused by "growth" without takeaway.

There is no such thing as everyone winning when it comes to the economy because wealth is part of the whole. For one to gain, another must lose an equal amount. If not eventually the market will adjust eventually, and everyone will lose a small amount to offset for the ratio.

One thing a lot of people forget is that wealth and poverty are relative relationships. As an example, a person in the western world would (probably) be considered poor if they simply could not afford to buy an iPod or videogame console; in contrast, a person in many countries around the world would be considered wealthy if they could feed their family 3 meals a day.

In a free market ecconomy there will always be wealthy people and there will always be poor people mainly because wealth is the incentive for working harder and doing more. This doesn't mean that living in poverty will always represents the same lifestyle as it does today; in fact, in most parts of the world people who are poor today are living a (much) more luxurious lifestyle than the middle class from their grandparents generation.

This is certainly not a popular concept with politicians because they can simply buy votes with the promise of making everyone far wealthier by stealing the wealth of the rich.

On a side note ... About 18 months ago I began to predict a (fairly) deep recession/depression in the US ecconomy because housing prices were unrealistic, and these high "values" for the home allowed homeowners to create imaginary wealth; I was by no means alone as thousands of bloggers began seeing the cracks in the system, although most were called crack-pots by the established analysts for predicting a recession in 12 to 24 months.

The reason why this is important is that the upcomming recession is necessary. Although it will not be entirely fair the recession will end up heavily punishing people who tried to cheat the system; trying to avoid the recession will likely end up punishing everyone equally (even those with good financial management). One of the things that keeps the ecconomy healthy (preventing hyper inflation for instance) is the moral-costs from foolish financial management of companies and households.

Oh no doubt Happy that there is always poor and rich people, however the idea is to not let the gap between them become too large, because a large disparity can lead to discontent and a wave of protectionism, and that is where the government can play a role, and its not about stealing from the rich to make everyone the same, its about marginal utility of money, since the more money you have the less benefit you gain from that extra dollar, so take some of theose excess dollars and place them where the marginal utility will be greater, hence where the moeny will have a greater effect is what the role of taxing the rich more is supposed to do, the rich remain rich, but the poor aren't as badly off.

And yes people who are poor in today's society are living a better lifestyle then they were 40 years ago, but that's not the issue, how much worse is their lifestyle than those in the highest income brackets is the issue, because peple will vote their own self interest, and if they feel globalization hurts them they will vote in polticians who promote portectionism, even if that is a negative in the long run.

In addition if people are too poor they begin to scrimp on things like Healthcare which can become a problem for society as a whole, because their usage of free services like ER's or free clinics when they become very sick becomes an added cost, which can be avoided at much lower costs via subsidies for people to afford healthcare

 Well, it's pretty clear we're not going to agree on the macroeconomics so I'll drop it to avoid beating a dead horse, but I think lifestyle standards of 40 years ago are very much the issue, and one of the strongest arguments i favor of free markets, people just don't realize that it is.  You're correct in that most people who vote will do so comparing themselves to those in the highest income bracket, because that's something tangible that they can see.  People don't consider what life was like 40 years ago when they vote, nor how far we've come since then.  Similarly, they don't consider the possibilities for 40 year's from now, which can only be achieved through economic growth and techonological innovation.

 I'm not against helping people out when they genuinely need help, but I think our government programs today have become bloated with free-loaders who would rather receive a government check than get a job.  That's a pretty cynical worldview, I know, but it's how I feel.

 Now Avinash, just to sate my curisoity, how do you feel about globalization overall, positive or negative?

I wish I sold my Apple shares when I was up by $150, now I'm down $200