August 11, 2011
The NYT has a good editorial outlining the weak U.S. growth prospects, although the double-dip discussion is silly – we’re looking at too slow growth, not a double-dip. The piece makes another serious error at the end when it argues that Germany, like China, should reduce its trade surplus.
China and Germany are in fundamentally different positions in the world economy. China is an extremely fast growing developing country. It would be expected that China would have a large trade deficit. By contrast, Germany is a very slow growing wealth country with a stagnant or declining labor force. It should be expected that Germany would have a large trade surplus as it sends capital to countries where it can be better used.
Comments