Good Quote

“Wealth is not without its advantages and the case to the contrary, although it has often been made, has never proved widely persuasive. ”
― John Kenneth Galbraith, The Affluent Society

Current Account Surplus - Good or Mixed Bag?

Economists have led us to believe that trade deficits are unhealthy for any economy, and lead to a crisis over the long-run (e.g., Italy, Greece, Spain).

But trade surpluses also have their downside. 

For instance consider the case of some European countries like Germany, Sweden, Switzerland, Denmark and the Netherlands which have been piling up surpluses. 

In these countries there has been fewer imports, and less domestic spending. 

Germany's surplus is an old agreement between businesses and unions in favour of wage restraint to help export industries remain competitive. This has freed firms from the threat of being held to ransom by unions. The government on its part has sponsored an admirable system of vocational training. Maybe India could take a page out of this book, since we are already implementing Skill India!

However, for a large economy, at almost full employment to run a current account surplus in excess of 8% of GDP puts an unreasonable strain on the global trading system and is a threat to the global free trade. 

How Do You Become a Good Economist?

6. 

If you are at a college or university, attend the economic research seminars at your college whenever you get a chance. 

You may not understand the discussions at first, because they may seem too technical, but you will pick up more than you know, and eventually you’ll be giving the seminar yourself!