Trade Wars Are Class Wars

How Rising Inequality Distorts the Global Economy and Threatens International Peace

By Matthew C. Klein, Michael Pettis

Trade deficits are often explained away by economic mismanagement. Surpluses are often cheered for a frugal people or political culture. Neither is true. A surplus is a sign of a suppressed working class where export income accumulates as profit and has a necessary counterparty deficit in another country that is prepared to serve a “stubborn” politically fueled perpetual imbalance. Two countries stand out on the surplus side: Germany and its insistence on balanced state budgets, a Euro shared interest rate regime in the EU — and of course China that has a severely suppressed worker and household income. Extremely important book.