Michael,
Email seduces us (me) into trouble by encouraging too brief answers.
The American economy is essentially preventing an international recession by virtually playing the macro role of importer of last resort. The US economy needs (re its deficits) others to pick up some of the slack - ie Europe and Japan need to grow. If Europe and Japan were growing, their imports from China would rise. You're right, this would not NECESSARILY mean a decrease in Chinese exports to the US but given Chinese concerns with growing too fast, a limit on Chinese growth plus a larger share of exports to Europe would reduce (or at least limit the grwoth of) exports to the US.
----- Original Message ----- From: "Michael Perelman" <[EMAIL PROTECTED]> To: <[email protected]> Sent: Wednesday, February 02, 2005 5:13 PM Subject: Re: [PEN-L] Deficits, the Dollar, and IEDs
Sam, I understand the complexity of managing balances in the context of a dynamic capitalist economy. European growth would contribute to demand in the United States, but I don't see how it would divert Chinese exports from the United States unless the supply of Chinese exports were relatively inelastic.
On Wed, Feb 02, 2005 at 03:04:58PM -0500, Sam Gindin wrote:
Perhaps an analogy may clarify this. The extent of post-war American dominance was a problem for the US beyond any geopolitical considerations. The US needed a healthy Eruope/Japan for a healthy American economy. The revival of Europe/Japan did create some headaches for the US but it dod not challenge American dominance (in spite of some of the expectations in the crisis of the 70s because they were by then integrated into the American empire). Today, the US remains dominant and the problems it does have, such as the trade deficit, reflect not Europe/Japanese strength but their weakness. The US would love them to both be growing again and absorbing some of the Chinese imports now concentrated on the US (as well as more American exports).
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu
