… is from page 203 of the late Robert Bartley’s 1992 book about America during the years 1983 through 1989, The Seven Fat Years:
There is, however, no significant way to shove capital into the Third World. It has to be pulled. The crucial variable is the economic policies of Third World nations. If their policies are destructive, the will suffer “capital flight,” that is, their own citizens will make their investments abroad. But if their policies are correct, their own citizens and foreigners will send money.
DBx: Yes.
When capital is largely free to move across international borders, capital is driven out of countries that pursue bad economic policies, causing such countries to tend to run trade surpluses, while capital is attracted into countries that pursue good economic policies, causing such countries to tend to run trade deficits.
Trump bemoans America’s soon-to-be 50-year unbroken string of annual trade deficits – meaning that Trump is upset that, at least relative to many other countries, U.S. economic policies have for the past half-century been relatively good. Trump is now doing his best to worsen U.S. economic policies. To the extent that he succeeds, he will indeed achieve his goal of reducing U.S. trade deficits, but he’ll do so only by making the U.S. more akin to poor countries that repel capital.
Yay for us Americans.
