A confession: When authors preface their book by favorably quoting the proto-Keynesian underconsumptionist John Hobson, I become immediately biased against the contents of the pages that follow. But accepting the assignment to review the book imposes on me a special obligation to cast such a bias aside. I did so. I really did. But in the end the bias would have proven justified.
Trade Wars Are Class Wars has a few good moments, as when the authors expose the errors that underlie Peter Navarro’s fear of the U.S. trade deficit with China. But what readers get mostly is a hash of old-fashioned Keynesianism and mercantilism, flavored with milk from some modern sacred cows.
The theme is easily summarized. Rising inequality means that an ever-larger portion of income goes to the rich. Because the rich have a higher propensity to save than the nonrich, savings grow excessively as consumer spending shrinks dangerously. The resulting excess of global savings is driven chiefly by countries that run trade surpluses, such as China. Reduced consumption as a result of inequality is exacerbated by government policies—again, such as those
