本文发表在 rolia.net 枫下论坛More Debt and Slower Growth
Apologists for Chinese currency and trade policies point out that U.S. consumers benefit from less expensive products at Wal-Mart and other purveyors of subsidized imports. But these bargains come at high cost: we are saddling our children with debt to foreigners and slashing economic growth.
Trade deficits must be financed by foreigners investing in the U.S. economy or Americans borrowing money abroad. Direct investments in the United States provide only about a tenth of the needed funds, and Americans borrow about $50 billion each month. The total debt is about $6 trillion, and at five percent interest, the debt service comes to about $2000 per U.S. worker each year.
High and rising trade deficits tax economic growth. Each dollar spent on imports, not matched by a dollar of exports, shifts workers into activities in non-trade competing industries like department stores and restaurants.
Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3.3 million jobs since 2000. Following the pattern of past economic recoveries, the manufacturing sector should have regained about 2 million of those jobs, especially given the very strong productivity growth accomplished in technology-intensive durable goods industries.
Productivity is at least 50 percent higher in industries that export and compete with imports. By reducing the demand for high-skill and technology-intensive products, and U.S. made goods and services, the deficit reduces GDP by about $250 billion a year or about $1750 for each worker.
Longer-term, persistent U.S. trade deficits are a substantial drag on growth. U.S. import-competing and export industries spend at least three-times the national average on industrial R&D, and encourage more investments in skills and education than other sectors of the economy. By shifting employment away from trade-competing industries, the trade deficit reduces U.S. investments in new methods and products, and skilled labor.
Cutting the trade deficit in half would boost U.S. GDP growth by one percentage point a year, and the trade deficits of the last two decades have reduced U.S. growth by one percentage point a year.
Lost growth is cumulative. Thanks to the record trade deficits accumulated over the last 20 years, the U.S. economy is about $3.0 trillion smaller. This comes to about $1000 per worker.
Our Legacy
As a consequence of decades of trade deficits, our children will be less productive, poorer and saddled with huge interest payments to foreign creditors.
No surprise these costs are overlooked by advocates of the status quo. Many work for private equity firms, hedge funds, and large commercial and investment banks on Wall Street. They champion outsourcing, as it offers the opportunities to finance big deals that move Midwestern factories to Asia and to enter Chinese financial markets. We would do well to remember they are the same bunch that gave us the subprime crisis, the collapse and foreign rescues at Merrill Lynch and Citigroup, the melt-down in the mortgage and housing markets, and the pending recession.
Meanwhile, the Bush Administration lectures China but ignores the corrosive consequences of the trade deficit. Leaders in Congress talk tough but have not acted.
Our children will be poorer, much poorer for this sophistry.
Prof. Peter Morici teaches at Robert H. Smith School of Business at University of Maryland.更多精彩文章及讨论，请光临枫下论坛 rolia.net
Apologists for Chinese currency and trade policies point out that U.S. consumers benefit from less expensive products at Wal-Mart and other purveyors of subsidized imports. But these bargains come at high cost: we are saddling our children with debt to foreigners and slashing economic growth.
Trade deficits must be financed by foreigners investing in the U.S. economy or Americans borrowing money abroad. Direct investments in the United States provide only about a tenth of the needed funds, and Americans borrow about $50 billion each month. The total debt is about $6 trillion, and at five percent interest, the debt service comes to about $2000 per U.S. worker each year.
High and rising trade deficits tax economic growth. Each dollar spent on imports, not matched by a dollar of exports, shifts workers into activities in non-trade competing industries like department stores and restaurants.
Manufacturers are particularly hard hit by this subsidized competition. Through recession and recovery, the manufacturing sector has lost 3.3 million jobs since 2000. Following the pattern of past economic recoveries, the manufacturing sector should have regained about 2 million of those jobs, especially given the very strong productivity growth accomplished in technology-intensive durable goods industries.
Productivity is at least 50 percent higher in industries that export and compete with imports. By reducing the demand for high-skill and technology-intensive products, and U.S. made goods and services, the deficit reduces GDP by about $250 billion a year or about $1750 for each worker.
Longer-term, persistent U.S. trade deficits are a substantial drag on growth. U.S. import-competing and export industries spend at least three-times the national average on industrial R&D, and encourage more investments in skills and education than other sectors of the economy. By shifting employment away from trade-competing industries, the trade deficit reduces U.S. investments in new methods and products, and skilled labor.
Cutting the trade deficit in half would boost U.S. GDP growth by one percentage point a year, and the trade deficits of the last two decades have reduced U.S. growth by one percentage point a year.
Lost growth is cumulative. Thanks to the record trade deficits accumulated over the last 20 years, the U.S. economy is about $3.0 trillion smaller. This comes to about $1000 per worker.
Our Legacy
As a consequence of decades of trade deficits, our children will be less productive, poorer and saddled with huge interest payments to foreign creditors.
No surprise these costs are overlooked by advocates of the status quo. Many work for private equity firms, hedge funds, and large commercial and investment banks on Wall Street. They champion outsourcing, as it offers the opportunities to finance big deals that move Midwestern factories to Asia and to enter Chinese financial markets. We would do well to remember they are the same bunch that gave us the subprime crisis, the collapse and foreign rescues at Merrill Lynch and Citigroup, the melt-down in the mortgage and housing markets, and the pending recession.
Meanwhile, the Bush Administration lectures China but ignores the corrosive consequences of the trade deficit. Leaders in Congress talk tough but have not acted.
Our children will be poorer, much poorer for this sophistry.
Prof. Peter Morici teaches at Robert H. Smith School of Business at University of Maryland.更多精彩文章及讨论，请光临枫下论坛 rolia.net