The “other countries should put tariffs on China” idea and the “China should shift its economy toward domestic consumption” idea are unified in the worldview of Michael Pettis, who has advocated both things. He has been saying that China needs to increase the share of consumption in its domestic economy for well over a decade, and it seems to me... See more

Economists weren’t always so mixed up. In his classic 1944 book, International Currency Experience , Ragnar Nurkse wrote that “the devaluation of a currency is expansionary in effect if it corrects a previous overvaluation, but deflationary if it makes the currency undervalued.” Tariffs, which are close cousins of currency devaluation, act in the

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In the case of Smoot-Hawley, it was clearly the second. At the time those tariffs were enacted, the United States suffered from too much saving and too little consumption. It is why the country exported so much to the rest of the world, like China does today. What Americans needed then (as Eccles understood) was to boost the share of production

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