Sunday, 8 Jun 2025
  • Contact
  • Privacy Policy
  • Terms & Conditions
  • DMCA
logo logo
  • World
  • Politics
  • Crime
  • Economy
  • Tech & Science
  • Sports
  • Entertainment
  • More
    • Education
    • Celebrities
    • Culture and Arts
    • Environment
    • Health and Wellness
    • Lifestyle
  • đŸ”„
  • Trump
  • House
  • White
  • VIDEO
  • ScienceAlert
  • Trumps
  • Watch
  • man
  • Health
  • Colossal
Font ResizerAa
American FocusAmerican Focus
Search
  • World
  • Politics
  • Crime
  • Economy
  • Tech & Science
  • Sports
  • Entertainment
  • More
    • Education
    • Celebrities
    • Culture and Arts
    • Environment
    • Health and Wellness
    • Lifestyle
Follow US
© 2024 americanfocus.online – All Rights Reserved.
American Focus > Blog > Economy > Who runs trade surpluses? – Econlib
Economy

Who runs trade surpluses? – Econlib

Last updated: May 6, 2025 11:50 am
Share
Who runs trade surpluses? – Econlib
SHARE

In a recent post, Kevin Erdmann employs the principle of never reason from a price change to clarify why low wages do not necessarily confer a competitive edge in international trade:

The confusion arises from a simplistic “all else held equal” mindset. The myriad costs associated with production are woven into a complex web of interactions. High interest rates may signal that investors are prioritizing risk over safety, while more corporations seek debt financing for expansion. At the micro level, high interest rates seem detrimental to profitability, yet, on a macro scale, they often correlate with increased economic activity.

Similarly, high wages are indicative of robust local economic and institutional quality. They emerge from a spectrum of choices available to workers and reflect the productivity stemming from the intricate network of cooperation and competition present in a flourishing economy.

Production relocates to areas experiencing rising productivity and improving institutions. It gravitates toward regions capable of enhancing output. Thus, the notion that production shifts to low-wage areas is misleading; rather, it is the places with the greatest potential for advancement that tend to have been historically disadvantaged.

Let’s examine the 20 countries boasting the highest wages worldwide, according to Numbeo.com.

(While ideally, pretax hourly wages would provide more accurate insight, this list remains relevant and closely aligned with appropriate data.)

Notably, among the ten highest wage economies, only three (the US, Iceland, and Australia) face trade deficits. In the subsequent ten, only two (the UK and New Zealand) exhibit trade deficits. This implies that 15 out of the 20 high-wage nations enjoy trade surpluses. Even when excluding the four oil and gas economies, 11 out of 16 still maintain surpluses. Hence, high wages are typically linked to trade surpluses.

See also  From the Middle Ages to Today’s Libertarian Tent?

Countries running trade deficits generally fall into two categories:

  1. Low wage economies
  2. English-speaking nations

Conversely, countries with trade surpluses tend to be characterized by three primary features:

  1. High wages
  2. Energy-exporting economies
  3. Confucian cultural influences (notably in East Asia)

In summary, the assertion that “jobs are leaving the US due to high wages” lacks empirical support. Wages are primarily reflective of productivity levels.

Never reason from a wage level.

PS: I frequently contend that bilateral trade balances are largely insignificant. A recent article in the Financial Times further illustrates this point:

Chinese exporters are increasingly attempting to circumvent tariffs imposed by US President Donald Trump by routing their goods through third countries to obscure their true origins.

TAGGED:EconlibrunsSurplusesTrade
Share This Article
Twitter Email Copy Link Print
Previous Article Trump shifts tariff goals from trade deals Trump shifts tariff goals from trade deals
Next Article BREAKING: Supreme Court Allows Trump Transgender Troop Ban to Take Effect | BREAKING: Supreme Court Allows Trump Transgender Troop Ban to Take Effect |
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Posts

Celebrating Black History While Diversity, Equity, and Inclusion Are Under Attack 

Black History Month has a deep-rooted history in agriculture, stemming from the establishment of Negro…

February 20, 2025

Honey Bunny’ Leads Prime Video Global Chart

Prime Video's latest Indian spy series, "Citadel: Honey Bunny," has taken the streaming world by…

November 13, 2024

Rollout of new tools to curb RSV expected to be smoother this year

For Beyfortus, the timing is also crucial. The injection has to be given to infants…

October 5, 2024

Study Reveals How This Artificial Sweetener May Cause Heart Damage : ScienceAlert

The Dangers of Aspartame: New Study Links Artificial Sweetener to Heart Disease Risk A recent…

February 19, 2025

Warren Buffett devotees say farewell at poignant Omaha ‘pilgrimage’

Warren Buffett’s Retirement Announcement Shocks Shareholders at Berkshire Hathaway MeetingFor years, Matt McAllister has been…

May 3, 2025

You Might Also Like

National Guard deployed in LA against anti-deportation protesters
Economy

National Guard deployed in LA against anti-deportation protesters

June 8, 2025
I’m a Gen Zer who landed a 6-figure job at Morgan Stanley before graduation. Here’s what the process was like — and why you should refresh a surprisingly important part of your rĂ©sumĂ©.
Economy

I’m a Gen Zer who landed a 6-figure job at Morgan Stanley before graduation. Here’s what the process was like — and why you should refresh a surprisingly important part of your rĂ©sumĂ©.

June 8, 2025
My Weekly Reading for June 8, 2025
Economy

My Weekly Reading for June 8, 2025

June 8, 2025
Donald Trump’s investment deals are a mirage
Economy

Donald Trump’s investment deals are a mirage

June 8, 2025
logo logo
Facebook Twitter Youtube

About US


Explore global affairs, political insights, and linguistic origins. Stay informed with our comprehensive coverage of world news, politics, and Lifestyle.

Top Categories
  • Crime
  • Environment
  • Sports
  • Tech and Science
Usefull Links
  • Contact
  • Privacy Policy
  • Terms & Conditions
  • DMCA

© 2024 americanfocus.online –  All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?