George Irvin tries to sort out the global economy.
Is there another answer? John Maynard Keynes proposed a perfectly sensible solution at Bretton Woods in 1944, namely, forcing surplus countries to spend their extra money in deficit countries, thus both their private spending and export capacity. The \”Keynes solution\” as is has been dubbed by the US economist Paul Davidson, was unfortunately vetoed by the Americans. In fairness, one must add that America rechannelled part of its surplus at the time into the Marshall Plan, thus enabling Europe to grow and to overcome its deficit.
There\’s a distinct problem with this idea.
Countries don\’t trade with other countries.
Individuals, those accumulations of individuals we call companies, they trade with other individuals and said accumulations. To say that \”Britain\” trades with \”Germany\” is reification….and while reification is sometimes useful, in this instance it isn\’t.
There\’s a company based in Britain that makes one third of the world\’s jet engines. Rolls Royce. People don\’t buy these jet engines because they come from Britain. They buy them because they\’re among the best in the world. And they also don\’t buy them because of (or in spite of) what the politicians who run Britain do.
So saying that the politicians must direct how the money earned from such jet engine sales be spent doesn\’t pass the basic logic test.