James Hamilton thinks so.
Hamilton is one of the most sober and level-headed economists out there, so I hope he's right.
Because reading Stephen Roach's debate with Desmond Lachman on trade policy with China doesn't fill me with confidence.
Roach, ever the committed but honest globalist, is as usual right when he concludes that,
"This debate touches many of America’s economic hot buttons — subpar job growth, near stagnation in real wages, deficit financing, and the hollowing out of smokestack industries. These are critically important issues that the US can no longer duck. Historically, our greatest strength as a nation has been to look inside ourselves and rise to the competitive challenge. The scapegoating of China is antithetical to that greatness.
I am deeply troubled that discussions of US-China trade issues always come back to what we in America think China is doing wrong. China is far from perfect and must accept greater responsibility for its role in trade disputes — especially with respect to intellectual property rights. But there’s a limit to what can be expected from China and a lot more we can ask of ourselves."
Yes, as he says the problem is a consequence of,
"... our inability to face one of our biggest economic shortcomings as a nation — a dearth of domestic saving".
Yet Roach offers no explanation as to why wages have stagnated and no solution to the problem of how to raise them. The answer is that he cannot - he is like Andrew Gimson, trying to reconcile irreconcilables.
He says globalisation is good - yet it is globalisation, a policy, not a process, that has caused the wage stagnation. The stagnation of Western wages is critical to globalisation's success.
If American wages have stagnated then how can savings rise? Does he really expect that an economy like the USA's, in which personal consumption accounts for 71% of GDP, could survive the impact of people not buying stuff? Or even buying less stuff?
How is this problem to be fixed? Can it be fixed? Must the world's financial systems be destroyed and rebuilt from scratch?
And Roach always has one big, big debit against him on the ledger - he never mentions the role played by immigration in pushing down real wages. The mass movement of hypermobile peoples' is the second prong of globalisation's fork.
No economist, particularly one as honest and thorough as Stephen Roach, should ignore it as a factor in their calculations.