I was asked how Germany manages to keep its manufacturing employment and its manufacturing wages both up and this post is my response. Consider the graph above. The Germans have an export-driven system. They maintain a positive balance of trade, exporting more than they import. Indeed, much of what the Germans import is oil and gas which they use to power their factories. Until quite recently the Germans maintained a trade surplus with China, one of relatively few countries to do so.
Without going too much into the mechanisms by which this operates, in effect the Germans export goods and import employment.
Now consider the U. S. balance of trade:
We import a lot more than we export. We import oil (although slightly less than we used to) and we import consumer goods. We do the opposite of the Germans, importing goods and exporting employment.
Although we could and IMO should import less, we can’t implement an export-driven strategy. The rest of the world isn’t rich enough to buy enough U. S. exports for that to happen.
