Increasingly, Fareed Zakaria has turned his attention from foreign policy to economics where his distinctive lack of insight into or understanding of American politics, policy, or, frankly, what’s actually going on in the world serves him in good stead. Today he turns to export trade as a beacon for future job growth in the U. S., praising the president’s leadership in that area:
Exports are growing at an annualized rate of 16 percent, which means that U.S. exports should double earlier than 2014, the goal President Obama set in 2009. Labor productivity in the United States is now the highest among Group of 20 countries, and this boost means that unit labor costs in the United States have dropped more than in any G-20 country except Taiwan.
The graph above from the invaluable FRED site of the St. Louis Federal Reserve depicts real U. S. exports of goods and services. Do you see a 16% annualized rate of growth? Me, neither. 16% would mean roughly $250 billion more. It’s just not there. The kindest interpretation I can come up with is that if you only look at growth from the trough of the recession and if you only consider dollar growth rather than real growth there might have been 16% growth from 2009 to 2010. That this has anything to do with any individual president’s policies is fatuous. What I see is a return to trend.
I am skeptical that inflation-driven nominal export growth is likely to be a major producer of new jobs.
I’m completely in favor of the U. S. exporting more, especially more finished goods. We should mine more, pump more, drill more, make more, grow more, provide more services, and sell more of what we mine, pump, drill, make, grow, and provide to overseas customers. But the numbers are against our doubling our real exports for the foreseeable future. For that to take place either a) there would need to be an unimaginable increase in world income or b) we would need to secure a much larger market share than we currently hold. We already export a lot. Doubling that will be a tall order and I seriously doubt that the other major export-driven economies will sit idly by while we increase market share.
Virtually every other economy (including China’s) is slowing. Can we expect 16% real annualized growth in a slowing global economy?
Mr. Zakaria goes on to single out Germany as a model to emulate:
The German system gives incentives to train workers and keep them employed; in contrast, the U.S. system emphasizes flexibility, the ability to hire and fire, and keeping wages low. Jacobs points out that, in a world filled with cheap labor, rich countries are better off with highly skilled workers, making premium products, with a focus on long-term growth and social stability. The German system, in other words, might be a better fit for the globalized world.
I don’t know what German labor laws are now but I’m very familiar with what they used to be. It used to be the case that it was practically impossible for a German company to fire a German national. Imagine academic tenure spread over an entire country and it might give you the picture.
German companies responded to this as you might expect: they were more likely to hire foreign workers than German nationals. There have been a lot of developments since then, namely the EU and the euro. Germany has pursued a mercantilist, beggar-they-neighbor policy to the point where its neighbors, in particular Greece, have become beggars. The euro ship is headed aground with Germany at the helm. Vada a bordo, cazzo! Get back on board, dammit!
I do think that there are some things Germany is doing that we might want to emulate. For example, in Germany there’s far less emphasis of the importance of college education and more on skilled trades. Germany has apprenticeship programs. However, I think we might want to reserve judgment on the German model for a few years.