The Stimulus Works! Just not in
The New York Times ran an interesting opinion piece today entitled “Return of the Killer Trade Deficit”. The conclusions were both fascinating and, frankly, unfounded.
In this article the American trade deficit was essentially blamed on others; specifically
The trade deficit is not a living thing or even a tool of other countries. The
In the last year, unemployment in
Just like the bailout of AIG to the tune of $165 Billion there is a direct flow-through pipe to foreign countries for our stimulus spending. When we bailed out AIG, within minutes the money was wired to overseas banks that were the so called counter-parties. Similarly, when the stimulus money was put into the hands of the general public in the form of a Keynesian demand stimulus, it did create demand; just not for American goods because we no longer manufactured the goods demanded.
Our Country abandoned managing trade policies and started assuming that the world economy would act rationally with the admission of China to the WTO in 1999 and adoption of NAFTA and similar free trade agreements. We are, however, still individual teams known as countries competing for an economic trophy. The choices of Germany and China were to protect and grow their manufacturing base and thus create a way to manage their economy in the face of world wide recession and they recovered quite nicely (won the trophy).
Blame is pointless for the past. Our leadership now must acknowledge we made bad choices and change our direction. As an old boss used to say: There are three rules of decision making: 1) Never make a decision until it is time; 2) when the time comes make a decision; 3) If the decision is wrong, change it! It is time to change our trade policies and change to support manufacturing again in the