Under Trump, America Is Abandoning Its Role as the World’s Economic Leader

By Stanley Fischer (original source Haaretz)

“For someone who started his economics education over 50 years ago, I learned to see the steadfastness of the United States in its support for trade liberalization as a fact of nature. From that viewpoint, a big surprise in the economic policy framework of the United States government during the last few years is the increased emphasis it is now putting on the bilateral balance of payments on goods account between the U.S. and each of its trade partners as the main criterion by which to judge whether a country’s trade policy is fair and appropriate. It sometimes appears that the criterion also includes the account on invisible trade – such as services and intellectual property – but that is not yet entirely clear.

Judging the appropriateness of a country’s exchange rate on the basis of the bilateral balance of payments is only part of a much bigger surprise in the behavior of the United States with respect to the international economy: It’s clear that U.S. President Donald Trump has decided to forgo the United States’ role as hegemon of the global economy – that is, the country that takes responsibility for the efficient operation of the international economy – even if at times doing so appears not to be in its short-run interest.”