Tuesday, April 26, 2016

America’s Trade Deficit 
Begins At Home
Economist Stephen Roach* points the finger at the U.S. for its trade deficit challenges .. says everyone is using China as a scapegoat to blame for the U.S. trade imbalance .. "What the candidates won’t tell the American people is that the trade deficit and the pressures it places on hard-pressed middle-class workers stem from problems made at home. In fact, the real reason the U.S. has such a massive multilateral trade deficit is that Americans don’t save .. In short, trade bashing is a foil for the vacuous promises that politicians of both parties have long made to American voters. Saving is the seed corn of economic growth – the means to boost American competitiveness by investing in people, infrastructure, technology, and new manufacturing capacity. The U.S. government, through decades of deficit spending and advocacy of policies that encourage households to consume rather than save, has forced America to rely on foreign saving for far too long. This has undermined U.S. competitiveness, punishing workers with the job losses and wage compression that trade deficits invariably spawn. America’s 101 trade deficits don’t exist in a vacuum. They are a symptom of a deeper problem: a US economy that has lived beyond its means for decades. Saving is but a means to an end – in this case the sustenance of a thriving and secure middle class. Without saving, the American Dream is in danger of becoming a nightmare. The trade debate of the current presidential campaign heightens that risk."
LINK HERE to the essay

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