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The Economists' VoiceTop Economists Take On Today's Problems$
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Joseph Stiglitz, Aaron Edlin, and J. Bradford DeLong

Print publication date: 2011

Print ISBN-13: 9780231143653

Published to Columbia Scholarship Online: November 2015

DOI: 10.7312/columbia/9780231143653.001.0001

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Government Deficits and the Deindustrialization of America

Government Deficits and the Deindustrialization of America

Chapter:
(p.99) Chapter 12 Government Deficits and the Deindustrialization of America
Source:
The Economists' Voice
Author(s):

Ronald I. McKinnon

Publisher:
Columbia University Press
DOI:10.7312/columbia/9780231143653.003.0012

This chapter argues that the deindustrialization of America is to blame for the soaring federal deficit. The reason: the need for large infusions of foreign savings to finance government borrowing sent the dollar higher and made it much harder for U.S. manufacturers to export their goods overseas. The United States government the world's champion borrower in international capital markets and foreigners are buying Treasury bonds in place of exports of American goods and services. This matters, not least because of the damaging effects on employment and the political consequences. The chapter concludes that the federal budget deficit has been too big for too long and now urgently needs correcting.

Keywords:   fiscal policy, fiscal deficit, budget deficit, deindustrialization, foreign savings, government borrowing, exports, U.S. manufacturers

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