The End of the New World Order

Let us find graceful ways to restore the trade balance

From Harold Seneker, Fair Lawn, NJ, US

3 hours ago

Take a long-term look at the US trade deficit from 1950 onwards and you can see that US trade was in trivial deficit for many years.

Deficits began worsening in the 1980s, and have really plunged since the mid-1990s, when Nafta, other trade deals and the massive expansion of Chinese imports into the US took hold in earnest. Since then, deficits have ranged broadly around $500bn a year. The change is quite dramatic.

Two questions come to mind. First, does the world really think such a massive imbalance can continue forever? And second, what do China, Europe and other major creditors think they are going to do with the astronomical numbers of dollars they are piling up, aside from helping the US Treasury finance its budget deficit?

I understand this arrangement helps some nations’ internal political problems, from dealing with recalcitrant French farmers to finding employment for 1bn Chinese, but all things come to an end eventually, and this imbalance must too. After all, a half trillion here, and a half trillion there — after a while it begins to add up to real money.

Perhaps, just perhaps, it might be wiser to work with the US to find graceful ways to restore the trade balance with a minimum of pain, and perhaps even to mutual benefit, rather than act as though redressing an imbalance were an act of war heralding the imminent end of civilisation. One step, which would not hurt exports to the US, might be to buy more US goods and services, rather than block or discourage trade in them.

Really, I buy them all the time, and they aren’t all that bad!

Harold Seneker
Fair Lawn, NJ, US