The Trumpian Myth Of Global Grand Theft, Part 4

At the end of the day, Donald Trump was right about the horrific results of US trade since the 1970s, albeit was totally wrong about the causes. In fact, he never got beyond a bombastic affection for 17th century mercantilism.

Nevertheless, even through the lens of free market economics you do not get an $810 billion trade deficit worldwide and a 66% ratio of exports ($1.55 trillion) to imports ($2.36 trillion), as the US did in 2017, on a level playing field. And most especially, an honest free market would never have generated an unbroken and deepening string of trade deficits over the previous 43 years running, which accumulated to the aforementioned sum of $15 trillion.

Better than anything else, those baleful trade numbers explain why industrial America has been hollowed-out and off-shored, and why vast stretches of Flyover America have been left to flounder in economic malaise and decline.

But two things are absolutely clear about the “why” of this $15 trillion calamity. To wit, it was not caused by some mysterious loss of capitalist enterprise and energy on America’s main street economy after the early 1970s. In fact, the dramatic flourishing of the tech industry and the internet based economy in the 1990s and after implicated the very opposite.

As we have seen, this economic decay—c0ntrary to the Donald’s simple-minded blather—was not caused by trade policy malefactors, either.  After all, the basic framework of global commerce and trade deals under the WTO and other multi-lateral arrangements was established in the immediate post-war years and was well embedded in the 1950s and 1960s. Yet that was a time when the US was still running balanced trade accounts.

Those healthy post-war US trade surpluses, in fact, were consistent with the historical scheme of things during the golden era of industrial growth between 1870 and 1914. During that era of gold standard-based global commerce, Great Britain, France and the US (after the mid-1890s) tended to run trade surpluses owing to their advanced technology, industry and productivity, while exporting capital to less developed economies around the world. That’s also what the US did during the halcyon economic times of the immediate post-war decades.