by MMT and trade deficits Unlike government deficits, which all countries in the world can run simultaneously, a trade deficit for one country necessarily means an equivalent trade surplus for the rest of the world. If there are countries deliberately running trade deficits, then they are forcing others to run trade surpluses. Since on this MMT argument, the trade deficit countries are the winners and the trade surplus countries are the losers, the former are behaving parasitically towards the latter. That should not be allowed if we are trying to achieve a harmonious global economy. That is not how MMT advocates … put the argument. Instead they effectively recommend it as a policy that, presumably, all countries should adopt. In my opinion, this goes
Topics:
Lars Pålsson Syll considers the following as important: Economics
This could be interesting, too:
Lars Pålsson Syll writes Daniel Waldenströms rappakalja om ojämlikheten
Peter Radford writes AJR, Nobel, and prompt engineering
Lars Pålsson Syll writes MMT explained
Lars Pålsson Syll writes Statens finanser funkar inte som du tror
MMT and trade deficits
Unlike government deficits, which all countries in the world can run simultaneously, a trade deficit for one country necessarily means an equivalent trade surplus for the rest of the world. If there are countries deliberately running trade deficits, then they are forcing others to run trade surpluses. Since on this MMT argument, the trade deficit countries are the winners and the trade surplus countries are the losers, the former are behaving parasitically towards the latter. That should not be allowed if we are trying to achieve a harmonious global economy.
That is not how MMT advocates … put the argument. Instead they effectively recommend it as a policy that, presumably, all countries should adopt.
In my opinion, this goes against the spirit of the core MMT arguments with which I agree, because those core arguments can be practiced by all countries at once, to the collective benefit of the global economy: unemployment would be lower and output higher (leaving aside the caveats I noted above) if all governments ran deficits.
The same can’t be done with trade deficits, because one country’s deficit impose identical trade surpluses on all others. Since the deficit countries win from this behaviour and the surplus countries lose, this is anti-social behaviour which should be deliberately curtailed.