05.08.11
Export balance explained, among other things
From Dean Baker, fulminant on the WaPo editorial page:
The Post then gives us it pure propaganda line:
“Increasing exports, as the administration aims to do, is a promising strategy.”
Can someone get these people an intro econ textbook? Increasing exports is not what creates jobs, it is increasing net exports (exports minus imports) that creates jobs.
If GM shuts an assembly plant in Ohio and instead ships its car parts to Mexico to be assembled there, are these parts exports creating jobs? In Washington Post land the answer is apparently “yes.” Unfortunately in the real world the answer is no. Since we have been increasing our imports more rapidly than we have increased our exports, the United States has been running a big trade deficit, leading to a large loss of jobs. (The trade deficit also implies negative national savings — and therefore either large budget deficits or negative private savings or some combination, but we’ll leave this issue for another day.)
Finally, the Post conclues by urging patience:
“The costs, human and economic, of high unemployment are heartbreaking. But it will take a measure of patience as well as a sense of urgency to prevent it from becoming a permanent feature of the U.S. economic landscape.”
Yes, all the buffoons running economic policy who could not see the largest asset bubble in the history of the world are still there running economic policy. All the Wall Street clowns who made a fortune pushing junk mortgages and packaging them into complex financial instruments are still rich. That’s just the way it is. The rest of us just need to be patient.
It’s worth adding that “increasing exports” the administration’s way usually just means either mostly arms deals or insignificant bumps in opening foreign markets to SUVs, and plutocracy artisanal economy products from small companies that very rarely expand their workforces in southern California.
And, to reiterate from yesterday’s last post: Who were the meatheads thinking there was an audience wanting to see Bill Pullman as Chase’s Jamie Dimon and James Woods playing the head of Lehman Brothers?