Krugman: 1.4 million U.S. jobs lost due to Chinese mercantilism.
Posted by scapozzola on 02/03/2010
New York Times columnist and Nobel-prize winning economist Paul Krugman was pondering U.S.-China trade recently and he came up with some interesting numbers. He was wondering about the toll that China's mercantilism is having on U.S. jobs:
we know that China is pursuing a mercantilist policy: keeping the renminbi weak through a combination of capital controls and intervention, leading to trade surpluses and capital exports in a country that might well be a natural capital importer. We also know, or should know, that this amounts to a beggar-thy-neighbor policy — or, more accurately, a beggar-everyone but yourself policy — when the world’s major economies are in a liquidity trap.Krugman says that China's current account surplus (almost 1% of world GDP) is now suppressing the rest of the world's exports--a roughly 1.5% "negative impact on gross world product." Extrapolating this to the U.S., he finds that by using a "rule of thumb that one point of GDP = 1 million jobs, we’re looking at 1.4 million U.S. jobs lost due to Chinese mercantilism." Read more.
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