Friday, 10 Oct 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
  • 🔥
  • Trump
  • VIDEO
  • House
  • White
  • ScienceAlert
  • Trumps
  • Watch
  • man
  • Health
  • Season
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  1 Stock-Split Artificial Intelligence (AI) Stock to Buy Before It Soars 285%, According to Certain Wall Street Experts

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

English Football League: Who has been promoted in the Championship, League One and League Two?

The race for promotion in the English Football League is heating up as teams vie…

May 2, 2025

RHOC’s Jo De La Rosa Teases Her Future on Bravo After Season Finale

Jo De La Rosa, former cast member of "The Real Housewives of Orange County," recently…

November 1, 2024

Charlie Constantinou Spring 2026 Ready-to-Wear Collection

Certainly! Below is a unique article that follows the structure and hierarchy of HTML tags,…

September 22, 2025

The Future Of Skincare Is Here: Exploring Biotechnology In Beauty

Certainly! Below is a new detailed article based on the extracted content you provided. The…

September 23, 2025

Chuck Schumer Obliterates Trump’s Shutdown Threats

Where was Chuck Schumer’s sharp intellect when it really mattered back in March? Now that…

September 28, 2025

You Might Also Like

Sugar Prices Retreat on a Forecast for a Global Sugar Surplus
Economy

Sugar Prices Retreat on a Forecast for a Global Sugar Surplus

October 10, 2025
Nvidia Stock Got Rocked by AMD’s OpenAI Deal, But Wall Street Still Loves NVDA
Economy

Nvidia Stock Got Rocked by AMD’s OpenAI Deal, But Wall Street Still Loves NVDA

October 10, 2025
Geopolitical Risk Supports Gains in Oil Futures
Economy

Geopolitical Risk Supports Gains in Oil Futures

October 10, 2025
Exclusive-GM backtracks on plan to claim last-minute EV tax credits
Economy

Exclusive-GM backtracks on plan to claim last-minute EV tax credits

October 10, 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?