The slow-moving tragedy of the trade deficit

I spoke this spring with John Williamson, an economist at the Institute of International Economics who created the idea of ‘The Washington Consensus’ as a set of expected reforms for dealing with economic crisis (a term since hijacked for other purposes).

We talked about currency issues in the global economy, and the growing pressure created by the gigantic surpluses China and other nations have built with the U.S. His big worries were that the U.S. trade deficit could send the economy into recession or cause a retreat from free trade. There is no quick fix for the deficit, but he thinks that with quick action, it might be halved in four years.

Despite his worries, he kept his sense of humor.

People tend to break down into two types, those who say we’ve called it as it is and wish the official world would start doing something about it, and others who say we’ve heard you calling wolf before, and nothing’s happened. And that of course is true (laughs). But it doesn’t mean there isn’t a real problem there just because disaster hasn’t happened yet.

The interview as I submitted it to Shukan Daiyamondo is here.
World Voice: John Williamson