VDH UltraThoughts On Trade Deficits—Irrelevant, Dangerous, or Advantageous? — Part Two
Victor Davis Hanson
Ultra Subcriber
Consider the massive increase in federal spending in the 21st century, which some may call the greatest “stimulus” package in history.
Did printing and pouring all that money into huge federal programs and entitlements spur economic growth—albeit in a suicidal and unsustainable fashion that has now caught up to us? Did all that federal increase in money do what World War II did in stimulating the economy?
But more importantly can it go on forever? And if not, for how much longer? And as the debt crushes us, do not trade deficits take on ever more importance?
In 2000, the national debt was $5.6 trillion or about 34 percent of GDP. Today it is $37 trillion and over 125 percent of GDP, and can no longer grow at the old rate and “stimulate” the economy to the point where trade deficits don’t matter.
Again, few point out that DOGE and addressing the trade deficit are just part of a larger effort to achieve a balanced budget, a far smaller trade deficit, and to confront the national debt. Even fewer voices offer Trump new ideas on how to balance budgets and trade, and reduce deficits and debt—other than screaming he is too herky-jerky, impulsive, erratic, nerve-racking, etc.
Perhaps true, but were the sober and judicious attitudes of prior presidencies preferable? The “don’t sweat it”, or “no cuts on my watch”, or the never voiced but all too real “at least it will not blow up during my administration”?
Joe Biden avoided a recession (actually he did not, but suffered two quarters in a row of negative GDP growth), sort of, by printing $7 trillion, with boondoggles like the ironically named “Inflation Reduction Act” and the absurd “Build Back Better” program?
Another point: why do pundits and economists simply cite GDP or per capita income, without examining social and cultural factors in the equation of massive trade deficits, and its siblings of offshoring and outsourcing?
Is there a connection between the laissez-faire attitudes about borders, illegal immigration and asymmetrical trade—as if the U.S. is on autopilot and shrugs and just lets global trends take their course?
Was the deindustrialization of the nation’s interior, coupled with indifference to the southern border, a cause of 80,000-100,000 fentanyl fatal overdoses a year? Was a contributing factor to social malaise the outsourcing thousands of good-paying jobs integral to allowing China to ship in cheap stuff—on the principle that the out-of-work welder or steam-fitter could clerk at Target and buy shoes and belts and caps from China at record low prices, and thereby survive?
What does The Wall Street Journal that for years told us illegal immigration was no big deal, and we needed inexpensive and plentiful labor now say about the closed border. Mum?
Or were the 12-million illegal aliens under Biden advantageous? If Trump cuts deals and reduces the trade deficit, will the Journal go silent in the fashion it did when Trump ended de facto new illegal immigration?
Is the flat fertility rate, fragmented families, and abuse—substance, familial, child, spouse—in any way connected to the destruction of good-paying industrial, assembly, and manufacturing jobs? If the U.S. is the world leader in robotics, AI, computer technology why would our factories not be the most automated and labor productive in the world?
In sum, if Trump can get 70 or so countries to reduce their dumping, tariffs, and trade machinations, continue to attract $4 trillion in foreign investment, and reduce the $1 trillion trade deficit to say $400 billion, while reducing the $2 trillion budget deficit to say $500-600 billion, would that not be success?
The post VDH UltraThoughts On Trade Deficits—Irrelevant, Dangerous, or Advantageous? — Part Two appeared first on VDH’s Blade of Perseus.
