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No, its the other way around: we have to give up trade deficits.

The sum of all foreign trade must be zero. Ergo, to give up deficits, you must give up surpluses.

That is the purpose of structural reforms,

No, if that were the purpose of structural reforms, then the structural reforms would include confiscatory taxation of extreme wealth, sharp discounting of overvalued currencies, picking strategic industry winners for aggressive state investment, and imposing restrictive joint venture and local sourcing requirements for high-tech imports.

This is not what is being done, therefore the purpose of structural reform is not to do away with trade imbalances (unless you wish to postulate that those who peddle structural reform are all idiots who do not understand elementary import substitution strategies).

which are necessary irrespective of whether we have the Euro or not.

Why?

It has nothing to do with the Euro. The problem is one of adapting traditional societies to the competitive environment of the modern world.

If adapting to the competitive environment of the modern world leaves a large fraction of the population substantially worse off, then why should we not simply throw up protectionist barriers against foreign competition?

Competition is, after all, a policy, not an objective. If we can protect the interests of the bottom three quarters of the income distribution at the "cost" of wiping out the accumulated wealth of the top quarter, then that's a feature, not a bug.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 11th, 2013 at 04:09:43 PM EST
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The sum of all foreign trade must be zero.

Never going to happen.  Latvia, say, is never going to have a viable domestic automotive industry and Germany, say, is never going to have autarky in food production.  The relative production costs, thus purchase price, for manufactured goods versus agricultural commodities means a steady trade imbalance between the two regions.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Mar 12th, 2013 at 02:34:21 PM EST
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And still the sum of all foreign trade must be zero, by the magic of double-entry bookkeeping: The exports of one state are the imports of another state. Sum up over the whole planet, and you have zero (so long as the rest of the galaxy does not pay us for the space probes we send them).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Mar 12th, 2013 at 02:38:37 PM EST
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Trade is the flow of goods and services thus we need to look at Cash Statements rather than Balance Sheets.  History shows there will always be a larger flow of cash from resource to resource-user regions.  (Tho' I concede the current situation increases that flow.)  Mostly, IMO, from the fact there are many more potential and actual resource regions producing, e.g., wheat, than resource-user regions producing, e.g., iPods.  Also resource regions tend to be over-populated with respect to the per capita current market value of their goods in international trade.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Mar 12th, 2013 at 03:13:57 PM EST
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Whichever way you look at it, at the macro level it has to net to zero. That's really not controversial, except to German politicians it would seem.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Tue Mar 12th, 2013 at 03:52:07 PM EST
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Surely you mean "fine us for parking the space junk we send them"?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Wed Mar 13th, 2013 at 08:51:33 AM EST
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