When I read that the balance of trade improved slightly last month, I wasn’t surprised since the considerable recent decline in the value of the dollar has made imports more expensive while lowering the real price of export goods. That’s good or at least necessary, but only in the sense in which it is necessary to go to the dentist after years of sucking on hard candy. Like working off a bout of inflation or increasing the savings rate, redressing a gross imbalance of trade inevitably involves pain. Just who does most of the suffering is another question. Which is probably why right-wingers view the trade balance with equanimity. They are aware that the balance of trade will eventually be redressed, but that’s OK because under the current political economy of the United States, the cost of paying down the deficit can be shifted to the proles. No need to lower your profit rate to reflect the lower prices you get for your goods internationally when the difference can be more than made up by lowering the standard of living of your workers who will be buying more expensive consumer goods on lower wages. A utopian solution, always assuming, of course, you don’t end up with your head on a spear.
The prosperity of the United States is artificial to a considerable degree. Unless we really do figure out how to make empire pay on a grand scale, our standard of living must eventually come more into line with the rest of the world. Such an outcome is not necessarily tragic, both because the continual improvement of technology means that a relative decline doesn’t have to imply an absolute decline and because wealth simply isn’t the only measure of the well being of a nation. If the burden of a decline were equitably borne, paying down the trade imbalance wouldn’t have to unpleasant political consequences. Indeed, shared sacrifices can promote genuine unity in a country, something with which we’re completely unfamiliar after long decades of commercialized patriotism. It might also be a relief to have some goal in this life beyond the endless accumulation of things. I don’t expect things to work out in this happy fashion, however. As the American economy continues to come under competitive pressure, the natural reaction of the well off will be to compensate for declining national income by increasing their share of what’s left.