FOR MY NEW WEBSITE CLICK HERE: WWW.FINGLETON.NET

When I launched unsustainable.org in early 2001, I was one of only a few commentators who were warning that U.S.  economic policy was on the wrong track. Although the American trade deficits were already then rising alarmingly and the manufacturing sector had been more or less gutted, almost no one in either the press or on Wall Street seemed to mind. 

Many observers even espoused a novel view that large trade deficits were actually a sign of strength, supposedly because the main causal factor was a rush of foreign money into U.S. investments. This interpretation was strongly pushed by the globalist lobby in Washington and was widely embraced by the conservative press, particularly the Wall Street Journal. 

As for manufacturing, this was dismissed as a relic of the mechanical era of the nineteenth century and the sooner the despised "Rust Belt" moved on to the postindustrial era the better. After all there were far more important things to do such as providing the world with computer software, entertainment, and financial services -- activities in which Americans were supposedly destined almost effortlessly to outproduce and out-earn more plodding mechanical-era competitors such as Japanese and Germans.

Ten years later almost everyone realizes that there is something terribly wrong. And for those who dig into the statistics, the most obvious and troubling evidence lies in trade.  America's current account deficit in a normal year now runs 5 to 6 percent of GDP. Given that its manufacturing sector, on which it depends almost entirely to try to narrow the gap, is down to 11 percent of GDP, it is pretty obvious that America's days as an economic superpower are over. Certainly it is to historians who remember that the last great power which thought it could indefinitely borrow from  rivals to fund its wars was the Ottoman empire.

Perhaps the most surprising development -- at least for those who believe what they read in the American press -- has been the performance of Japan. While American press commentators have been indulging in constant schadenfreude at the Japanese economy's expense, Japan has moved decisively to surpass the United States as the world's principal source of advanced producers' goods. The result is that in the midst of the worst global slowdown since the 1930s, Japan last year earned a current account surplus of $194 billion. It is fair to say that Japan now occupies a position of unchallenged dominance in producers' goods unmatched by any nation since America's peak years of industrial leadership half a century ago. Japan's latest surplus represents a rise of more than five-fold on 1990.  And this was achieved in the teeth of intensifying competition from South Korea, Taiwan,  Germany, and, of course, China.  As for the United States, by a remarkable coincidence, it also multiplied its current account balance more than five-fold -- its current account _deficit_, that is! 

I have transferred some of Unsustainable.org's "Greatest Hits" to my new website, www.fingleton.net. Click on the links to read the articles. Better still check out the entire www.fingleton.net site.