U.S. politicians invariably bemoan trade as the enemy of the middle class, the major source of pressure on jobs and wages. The current presidential campaign is no exception: Republicans and Democrats alike have taken aim at both China and the Trans-Pacific Partnership, holding them up as the scourge of beleaguered American workers.
While this explanation may be politically expedient, the truth lies elsewhere.
When it comes to trade, as I recently argued, America has made its own bed. The culprit is a large saving deficit; The country has been living beyond its means for decades and drawing freely on surplus saving from abroad to fund the greatest consumption binge in history. Politicians, of course, don’t want to blame voters for their profligacy; it is much easier to point the finger at others.
Read Full Article »