March 11, 2019
In the Soviet Union, for a long time, official publications (which were the only publications) were prohibited from mentioning Leon Trotsky, one of the leaders of the revolution, who subsequently fell out with Stalin and was forced into exile. I’m wondering if The New York Times has the same policy towards mentioning the trade deficit as a cause of economic weakness.
It’s hard to reach any other conclusion after seeing David Leonhardt’s piece on the recurring tendency of forecasters to be overly optimistic about economic growth. Leonhardt points to the persistent shortfall of demand as the major problem slowing growth. Following Larry Summers, he suggests policies that could boost investment and consumption.
While these are both good ways of increasing demand, so is a lower trade deficit. This is very basic economics. If the trade deficit were 1.0 percent of GDP rather than a bit more than 3.0 percent of GDP, it would provide the same boost to demand as a $400 billion annual stimulus package.
It’s sort of amazing that Leonhardt can leave such a basic and obvious point out of this discussion. Did the NYT’s commissars airbrush the trade deficit out of the article?
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