Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Speak Loudly, but carry No Stick!
In my last posting, I discussed the choice facing the Obama administration after Geithner's letter to his fellow G-20 finance ministers, calling for balanced world trade, was applauded by UK, Canada and Australia but vetoed by the mercantilist countries. I wondered if the Obama administration would take action to achieve balance trade, or whether it would continue to think that it could talk the mercantilist countries into abandoning their successful strategy. I wrote:
Peter Morici sees the current situation through the same prism, but he doesn't expect any administration action that goes beyond diplomacy. He writes (QE2 Won't Make Big Waves as G20 Flops):
At the G20 talks, Treasury Secretary Geithner failed to accomplish a grand bargain to wind down Asian trade surpluses and boost demand for what western economies make. Opposition from champion mercantilists Japan and Germany, who pioneered some of the very tactics China now exploits on a grander scale, caused the G20 to adopt only soft, modest goals and no remedies for deficit countries like the United States.
The stakes couldn't be higher for the Democratic Party and for the American people. As I noted, if the administration takes effective action to balance trade:
But I, like Morici, thought it likely that the administration will fail to act. I continued:
When the chapter on Teddy Roosevelt's successful foreign policy was written, it was entitled, "Speak Softly, but carry a Big Stick." When the chapter on Barack Obama's foreign policy is written, it may be entitled, "Speak Loudly, but carry No Stick."
Journal of Economic Literature:
Atlantic Economic Journal: