Cumulative trade surpluses or deficits, 1980-2008, in billions of dollars. Source: Wikipedia. Double click to enlarge.
Among the world’s rich countries, the United States has a continuing trade deficit, Germany and Japan have continuing trade deficits and the other rich countries move up and down, slightly above and slightly below the break-even point. But the French economist Thomas Piketty, in his new book, Capital in the Twenty-First Century, pointed out that, if you add them all up, the rich countries as a group have a trade deficit.
Are the rich countries in debt to the poor countries? No, said Piketty. If you lump all the poor countries together, they, too, have a combined trade deficit.
In other words, the whole Earth has a trade deficit. But according to basic economic theory, any nation’s deficit is a surplus for some other nation or group of nations. Could this mean that Earth has an unfavorable trade balance with Mars?
No, Piketty said. The problem is that not all the world’s trade is accounted for — in particular, the trade that winds up in hidden accounts in the world’s tax havens. If it was known how much it is, and who owns it, we probably would realize that the world’s super-rich hold an even higher percentage of the world’s wealth than we think.
One of the benefits of a global tax on capital would be to bring this hidden wealth to light, he said. Even if you don’t accept the idea of a tax on capital, there is a need for international cooperation on financial reporting and prevention of tax evasion. World trade treaties, instead of protecting international corporations from national governments, should provide for sharing information on wealth, and for boycotting jurisdictions that don’t meet international standards for reporting.
LINKS
Inequality & Capital in the Long-Run by Thomas Piketty
Capital in the Twenty-First Century: Introduction by Thomas Piketty
Why the rich will probably get richer for my synopsis of Piketty’s book
Tags: Capital in the Twenty-First Century, International trade, International Trade Agreements, Tax Havens, Thomas Piketty
Phil Ebersole's Blog 
May 1, 2014 at 9:02 am |
From PolitiFact, on the Walton family (Walmart):
“Our colleagues found that Sylvia Allegretto, a labor economist at the University of California, Berkeley, compared the Waltons’ cumulative net worth with that of the overall population, as cited in the Federal Reserve’s Survey of Consumer Finances. That survey was published in August 2012.
Allegretto found that the Waltons’ wealth in 2010 was valued at $89.5 billion — equal to the entire bottom 41.5 percent of American families”
The discrepancy has grown since 2010, the last year that figures were available, because so many Americans lost their homes, the largest part of their net worth.
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