1/6
It really doesn't matter how innovative US manufacturing might be, as long as the role of the US in the global trade and capital regime is to provide the deficits needed to accommodate the surpluses of...
wsj.com/articles/manuf… via @WSJ
It really doesn't matter how innovative US manufacturing might be, as long as the role of the US in the global trade and capital regime is to provide the deficits needed to accommodate the surpluses of...
wsj.com/articles/manuf… via @WSJ
2/6
...countries like China, Germany, and Japan, by running the capital account surpluses that accommodate their excess savings, the US share of global manufacturing must decline as the share of the surplus countries rises.
carnegieendowment.org/chinafinancial…
...countries like China, Germany, and Japan, by running the capital account surpluses that accommodate their excess savings, the US share of global manufacturing must decline as the share of the surplus countries rises.
carnegieendowment.org/chinafinancial…
3/6
Nothing that US manufacturers do, or US manufacturing policy does, can ever prevent the global balance of payments from balancing. As long as these countries run surpluses, and as long as the US financial markets absorb their excess savings, the US must run deficits.
Nothing that US manufacturers do, or US manufacturing policy does, can ever prevent the global balance of payments from balancing. As long as these countries run surpluses, and as long as the US financial markets absorb their excess savings, the US must run deficits.
4/6
That's because net capital inflows force adjustments in the US economy that prioritize consumption over production. US producers are forced effectively to subsidize US consumers so as to reverse the subsidy consumers in surplus countries are forced to provide to producers.
That's because net capital inflows force adjustments in the US economy that prioritize consumption over production. US producers are forced effectively to subsidize US consumers so as to reverse the subsidy consumers in surplus countries are forced to provide to producers.
5/6
When analysts or policymakers say that US deficits would end if only US manufacturers were more efficient, or more productive, or if Americans were thriftier, they clearly do not understand the balance of payments or how the global trade and capital regime works.
When analysts or policymakers say that US deficits would end if only US manufacturers were more efficient, or more productive, or if Americans were thriftier, they clearly do not understand the balance of payments or how the global trade and capital regime works.
6/6
The balance of payments must balance. Global savings must equal global investment. Production must equal demand. The role of the US in the global system is to make everything balance, and that comes at a cost for both the US and the global economy.
carnegieendowment.org/chinafinancial…
The balance of payments must balance. Global savings must equal global investment. Production must equal demand. The role of the US in the global system is to make everything balance, and that comes at a cost for both the US and the global economy.
carnegieendowment.org/chinafinancial…
This 2017 ITIF research piece suggests how a persistent trade imbalances may affect the evolution of a country's share of global manufacturing.
itif.org/publications/2…
itif.org/publications/2…
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