Everyone Wants to Go to Export Heaven
In its latest semiannual currency report, the U.S. Treasury Departmentcriticized Germany's heavy reliance on exports to fuel its economy. Germany's dependence on exports, it said in essence, is the rest of the euro zone's inability to pursue sound economic policy. (It also criticized China and Japan, but presumably they're used to it.)
Now Germany is striking back, essentially telling the U.S. Treasury to go tend to its own knitting. It can't help that this is all developing around the same time as the revelations that our National Security Agency has been spying on Chancellor Angela Merkel. If I were German, I personally would be more than a little irritated.
What's interesting in this is not these ritualistic spats, in which the Treasury Department solemnly intones that people shouldn't get so obsessed with exports, then some other world leader formally requests that we shut the hell up about their trade and currency policy. What's interesting is that we're having exactly the same ritualistic spats that we were having 10 years ago, when I first started writing for the Economist. Japan, China and Germany are entirely dependent on exports to keep unemployment to a low roar. The U.S. is running a persistent current account deficit and, in fact, hasn't been in the black since 1990.
No one thinks this is sustainable. But none of the big players wants to end it, either; Americans aren't ready to actually start saving like a grown-up nation, and the export powerhouses are desperately trying to accumulate a massive hoard of IOUs before their entire populations age into Centrum Silver territory.
Yet unlike Germany, Japan and China, the U.S. feels the need to actively argue in favor of its own position. China doesn't go around trying to get other nations to export a quarter of their gross domestic product. In fact, China would rather not have the competition. But the U.S. has to complain. And I have to wonder if we don't feel a bit guilty about our running tab with, well, the rest of the world. We're like a drunk who wants to reform but knows he lacks the willpower, so he urges the bartenders to close down and take up haberdashery. Which is a good guide to how effective the whole thing is.
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Megan McArdle at firstname.lastname@example.org