Unbalanced ‘Reasoning’

by Don Boudreaux on September 13, 2010

in Balance of Payments, Seen and Unseen, Trade

Here’s a letter to the New York Times:

How disappointing that a trade economist of Paul Krugman’s stature has become a leader of the protectionist tribe (“China, Japan, America,” Sept. 13).  Like all members of that anxious and ill-informed clan, he tosses around arguments without concern for facts or consistency.

Consider: Given Mr. Krugman’s claim that we live today “in a world awash with excess savings,” why does he suppose that a lower U.S. trade deficit with China will not be offset by higher trade deficits with other countries?  (The U.S. today has trade deficits with more than 90 other nations.)

Someone has to lend Uncle Sam all that money that Mr. Krugman famously demands that Uncle Sam borrow and spend – a demand that is not just a little bit inconsistent with Mr. Krugman’s call for Congress and the President to take actions to reduce the U.S. trade deficit with China.

Sincerely,
Donald J. Boudreaux

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