Yesterday, Toyota announced that they’re going to start exporting U.S.-built Camrys from Georgetown, Kentucky to South Korea.
Karl Smith wisely points out that this is a great example of what a recession isn’t. If the problem is years of “living beyond our means” the solution dictated by cosmic justice is years of laboring in auto plants building cars for South Koreans to drive. If the question is “why are we consuming so much less than we produced” the answer may be “it’s because in the past we consumed more than we produced.” But right now the question facing America is “why are so many millions of people producing nothing at all.” The answer can’t be simply that we had too much debt in the past or that we lived beyond our means. And the same thing applies to sky-high unemployment in Spain. Increasing the quantity of people who are sitting on the couch watching daytime TV and scanning the help wanted ads is not a useful step toward to rectifying structural imbalances in your economy. We’ll adjust faster, not slower, if we get fiscal and monetary policy that’s dedicated to waging war on unemployment.