Would Better Measurement of Software Cut U.S. Trade Deficit in Half?

That's what a story in the Financial Trimes tells readers. I don't think they have much of a case.

The argument is attributed to Hal Varian, Google's chief economist and a former professor of mine when I was in grad school at Michigan. According to Varian, if we accurately counted the value of software in smartphones it would add $200 billion to U.S. exports, cutting our trade deficit in half.

The first item to point out is that our trade deficit is currently running at an annual rate of $640...