Merkel should stay the course
Chutzpah. I believe that's the word for it.
Just days after learning the Americans have been tapping her phones and taping her conversations, Angela Merkel has been publicly upbraided by the U.S. Treasury for being a bad global citizen. What did she do to deserve this?
Merkel is a bad global citizen because Germany is running the world's largest trade surplus.
The Washington Post thinks the Treasury's tongue-lashing is overdue, as does Paul Krugman of The New York Times: “In this environment, a country that runs a trade surplus is ... beggaring its neighbors. It is diverting spending away from their goods and services to its own, and thereby taking away jobs.”
Is this not astonishing? Competing successfully in world markets is now tantamount to stealing food off the table of one's less-competent and less-successful neighbors.
By this standard, America was a rotten global citizen for the first seven decades of the 20th century, when we ran trade surpluses every year. From the Civil War through the Roaring '20s we became the mightiest manufacturing power the world had ever seen.
Every modern nation that has risen to world power has done so through economic nationalism: Britain under the Acts of Navigation; the United States under protectionist Republicans from 1860-1914; Bismarck's Germany; postwar Japan, which rose from the ashes of 1945 to become the world's second economy; and China from 1980 to today.
Germany is the powerhouse of the European Union, makes some of the finest products on Earth, and sells abroad one-third of all she produces. Her unemployment rate is only 5 percent.
The Post and Krugman feel the Germans must shake off their habit of working and saving and start spending to get Club Med countries like Spain and Greece out of intensive care. The Post wants Merkel to embrace the Social Democrats' idea of raising the minimum wage to $11.50 an hour. The need, says Treasury, is for “rebalancing.”
Basically, what the globalists want is for prudent counties with trade surpluses to start running deficits to get money flowing, like transfusions, into the moribund economies. From their behavior in recent decades, neither the Chinese nor Japanese nor Germans, proprietors of the second, third and fourth largest economies, buy into this ideology.
And how has America's conversion to globalism worked out for us?
During 25 years of free-trade globalism, the United States has run up well over $10 trillion in trade deficits in goods. And what do we have to show for it?
Our economic independence is history. We rely on foreigners for the necessities of life. We are the greatest debtor nation in history. Beijing and Tokyo bank scores of billions in annual interest payments on the T-bills and Treasury bonds they hold. And as the gleaming cities of Asia rise, America's infrastructure visibly crumbles.
The real wages of our working men and women have not risen in decades. In the first decade of this century, we lost 6 million manufacturing jobs as 55,000 factories disappeared.
Why should successful Germans emulate the folly of the failed American politicians responsible for the decline of the greatest republic in the history of mankind?
Pat Buchanan is the author of “Suicide of a Superpower: Will America Survive to 2025?”