Yesterday I read an article by Thomas Geoghegan on “The Nation.com” website. Yes it is indeed a far left rag, but sometimes it pays to see what they over yonder are thinking. They, once again, didn’t disappoint. I got about halfway, ok; I completed the first paragraph, when I thought maybe I should refute this.
The article he penned, or typed, was about the progressives’ economic hero John Maynard Keynes, the trade deficit & exports vs. imports. He asks himself, “What would Keynes do?”, regarding the economic malaise the country finds itself in.
Geoghegan writes, “For Keynes, the problem would be not just getting people into stores, or even getting employers to hire but getting our plutocracy (the rule or control of society by the wealthy) to invest. It’s not just our jobless rate but also our huge trade deficit that would appall him. He’d be aghast to see the United States bogged down in so much debt compared to the rest of the world.” I’m sure he would be aghast. I’m aghast by the debt we’ve accumulated also. Our private sector plutocracy, as he calls it, would love nothing more than to invest in this country. Unfortunately, like American Airlines (a sinking ship), the U.S. is not the greatest investment right now.
He continues, “Especially in a recession, he hated to see a country with a trade debt, or trade deficit, which arises when a country’s imports exceed exports. Indeed, when the trade deficit is as jaw dropping as the US trade deficit is now; it is harder to use Keynesian deficit spending to push employment back up.” Show me a single instance in history where Keynesian deficit spending has ever worked & hasn’t exasperated the problem. Of course imports exceed exports. Remember, we don’t make anything in this country anymore.
“The merchandise trade deficit of the United States is scary: $680.9 billion as of July 9…. It’s as if I’m pressing on the sucking chest wound in the world economy”, Geoghegan explains. That is a quite large number. Almost as much a the failed Keynesian style porkulus package with the Shovel Ready jobs that weren’t so shovel ready.
He states, “Actually, the trade deficit might be worse if there was full employment, our supposed goal, since we would have the money to buy even more hardware from abroad as we bite into more sandwiches at Jimmy John’s.” Never had a sandwich at Jimmy Johns, but now I know full employment is apparently a bad thing.
“Underneath that, there is a still bigger deficit, with US corporations outsourcing so many jobs. Here is a headline from the Wall Street Journal on April 19: BIG US FIRMS SHIFT HIRING ABROAD. During the 2000s, the Journal reports, while US multinationals have fired 2.9 million workers here, they have hired 2.4 million abroad. By the 1930s Keynes had notoriously turned against free trade and was giving lectures on the need for “national self-sufficiency. The one big (and smart) idea of absolute monarchy was to push exports over imports”, Geoghegan exclaims. That’s a lot of workers. It is very interesting that he never goes on to explain just why that might be.
“Keynes would not believe how Obama, the Tea Party, the Democrats, the Republicans—our leaders—pay so little attention to our whopping trade deficit, as if it had nothing at all to do with our slump.” Well, he got 3 out of 4 right.
He continues with, “But until we bring down the trade deficit and fix our balance of payments, there is no way out of debt.” (Balance of Payments: A summary of the international transactions of a country over a period of time including commodity and service transactions, capital transactions, and gold movements). I agree with that. “ It’s simple arithmetic”, he writes. “Somebody in this country is going to have to go into debt to make the balance-of-payments balance. Who’s going to do it? It’s the government or us. One day Uncle Obama or his successor will say, “I’m done going into debt to make the balance ‘balance.’ It’s your turn to go into debt to make the balance ‘balance.’”
Ok, I’ve had enough. These socialists will never get it. All that we’ve seen in this article is the typical lefty clap-trap. Somebody has to go into debt? Really? That’s the only answer?
There wasn’t a single word regarding cutting spending or the size of our bloated government. Not one word! How is going into debt going to balance anything, ever? No explanation of why jobs are leaving this country. Here’s the explanation. We are one, if not the most regulatorily burdened countries on earth. We have the highest corporate tax rate in the world. Gee, I wonder why companies are packing up? Why would anyone want to start a company without knowing what they have to comply with next year or even next week? Of course we have to import everything. Nanny government won’t allow us to make anything (Gibson Guitars, etc).
We did learn that an Absolute Monarchy can be a good thing. That’s something.
This is just another shining example that Keynes was an idiot & so is this author. I need an aspirin.