Once upon a time: net exporters in Wonderland

This is a very nice way to learn the lessons of the past, taken from a 2009 paper by Jeffrey Frieden:

“In a 1932 presidential campaign speech, Governor Franklin D. Roosevelt emphasized the contradictions of the incumbent Republican government’s international economic policy, comparing it to the fantasy world of Alice in Wonderland:”

A puzzled, somewhat skeptical Alice asked the Republican leadership some simple questions:
“Will not the printing and selling of more stocks and bonds, the building of new plants and the
increase of efficiency produce more goods than we can buy?”
“No,” shouted Humpty Dumpty, “The more we produce the more we can buy.”
“What if we produce a surplus?”
“Oh, we can sell it to foreign consumers.”
“How can the foreigners pay for it?”
“Why, we will lend them the money.”
“I see,” said little Alice, “they will buy our surplus with our money.  Of course these foreigners
will pay us back by selling us their goods?”
“Oh, not at all,” said Humpty Dumpty, “We set up a high wall called the tariff.”
“And,” said Alice at last, “how will the foreigners pay off these loans?”
“That is easy,” said Humpty Dumpty, “did you ever hear of a moratorium?”
And so, at last, my friends, we have reached the heart of the magic formula of 1928.

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