In the end, Americans will face even further cuts in their living standards. It is not possible to point to a single instance anywhere in the world of a government driving wages, environmental standards and social protections from a European or North American level to an Asian or Latin level with a resulting restoration of competitiveness. There is no such example, and there will never be one, because it cannot be done. We will try this, of course, but Americans do not have unlimited tolerance for pointless sacrifice. Again I think not, because we cannot escape from the much more global economy in which we now live.
Trade is twice as high in proportion to output as it was then.
There may be a new form of global Keynesianism on the horizon, however. John Maynard Keynes the economist was, above all, an optimist. And if we consider the objective global situation without succumbing to the dismal gloom of current U.S. politics, we must concede that the grounds for optimism are exceedingly strong. First, with the arms race at an end, we could sharply reduce the military budget. Second, we have the opportunity to greatly expand our trade with 40 per cent of humanity with whom, because of the Cold War, trade was previously seriously limited.