A government official emphasized to me today what should be clear to anyone who follows Calculated Risk’s charts, namely that a huge element of our trade deficit has nothing to do with China or manufacturing but is instead driven by oil:
Now it’s not unusual that the US is a net oil importer. Most countries are. But America is a much more oil-dependent country than other places are. We have more anti-density regulations, more subsidization of big houses, less taxation of gasoline, less investment in mass transit, etc. than most developed countries. This isn’t really a coincidence. The United States was a net oil exporter in the late-1940s. So we had a postwar industrial policy paradigm built around suburbanization and powerful firms in the oil and automobile sectors. The problem is that we’re not a net oil exporter anymore by a long shot. But we still have a policy paradigm build around encouraging lavish consumption of gasoline. Under the circumstances, we’d have to run a really enormous surplus in goods and services to cover the oil gap.