Good Guys and Bad guys

Here’s a list of the 15 biggest current account surpluses, at least for countries listed in the back of the Economist magazine:

Country CA surplus (share of GDP)
Saudi Arabia

Singapore

Norway

Malaysia

Switzerland

Taiwan

Venezuela

Netherlands

Hong Kong

Sweden

Denmark

Germany

Russia

Thailand

China

25.5%

15.5%

12.9%

12.3%

12.2%

8.4%

8.0%

7.3%

6.6%

6.4%

5.4%

5.0%

4.9%

4.1%

4.0%

Now let’s discuss how “we” think about the surpluses for Norway and China.  (Of course by “we” I mean us white people):

1.  Norway:  What’s not to like?  Finally there’s a country that isn’t blowing all its oil wealth like those more “backward countries.”    By backward, I mean cultures that don’t have that enviable Nordic patience, whose governments don’t have the ability to defer instant gratification.  The Norwegians are smart; they are socking away hundreds of billions of dollars in a sovereign wealth fund, which they will be able to draw on when the money runs out.  What an inspiring model for the world!

2.  China:  You just can’t trust those inscrutable Chinese.  Their government doesn’t play fair, they are socking away hundreds of billions in international reserves.  Look at those huge trade surpluses (no less than 4% of GDP!!)  Don’t believe me? Paul Krugman sees what the real problem is:

And this in turn means that the savings glut possibly making the natural real rate negative is actually originating abroad, not at home.

Do you sort of see why I’m a hawk on China policy?

Krugman is one of the few China-bashers who sees the real problem with crystal clarity.  It’s not about exchange rates; after all, fixing the nominal rate has no effect on the real exchange rate.  No, the real problem is countries that save.

And don’t tell me that the Northern European countries (in aggregate) have a vastly bigger CA surplus than China.  What difference does that make?  After all, any jobs “we” lose will be offset by jobs that “we” gain.  Remember who “we” are.  We are white people.

PS.  For those readers who are new to the blog, any bigotry was meant to be sarcastic.  My grandmother was Norwegian and my wife is Chinese.

PPSMichael Pettis points to the absurdity of the Europeans asking for a loan from China, when the Northern European countries already have massive CA surpluses.

PPPS.  By “Northern European,” I mean the 6 countries on the list above that lie between Switzerland and Norway.  They have a $455 billion surplus, as compared to China’s $303 billion.

About Scott Sumner 490 Articles

Affiliation: Bentley University

Scott Sumner has taught economics at Bentley University for the past 27 years.

He earned a BA in economics at Wisconsin and a PhD at University of Chicago.

Professor Sumner's current research topics include monetary policy targets and the Great Depression. His areas of interest are macroeconomics, monetary theory and policy, and history of economic thought.

Professor Sumner has published articles in the Journal of Political Economy, the Journal of Money, Credit and Banking, and the Bulletin of Economic Research.

Visit: TheMoneyIllusion

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