Another Shrill Economist
Shrill is, of course, the word conservatives often use to label an economist when said economist makes a case that they cannot refute with logic or data.
This time, it’s Columbia professor, Nobel Prize winner, and former Chief Economist of the World Bank, Joseph Stiglitz (vita), writing in the Guardian:
Second, if a country invests more than it saves, it will need to borrow, and the counterpart to that borrowing is a trade deficit. America’s burgeoning trade deficit is a result of Bush’s unprecedented mismanagement. Tax cuts that the US could ill afford turned a huge fiscal surplus into a massive deficit; rather than saving, America is borrowing, much of it from abroad. That – not China’s exchange rate policy – is the culprit.
In fact, China’s overall trade surplus today is small, around 1% of its GDP. Of course, the Bush administration wants to shift the blame, but neither China, nor anyone else, should be fooled. This is reminiscent of what happened 20 years ago, when President Reagan engineered huge tax cuts which incited huge fiscal deficits, which in turn led to huge trade deficits. Back then, Japan was blamed!
The harsh truth is that neither the IMF nor the Bush administration really believes in free markets. They interfere with markets when it suits their purposes. Bush supported bailouts for airlines, unprecedented subsidies for agriculture and tariff protections for steel.
Indeed, heh, ok then, and so there. (Via 18 Minute Gap).