Here is what you could do for us – for starters.
First, Japan reported last week a $184 billion surplus on goods and services trade with abroad in 2016. That is the amount of money Tokyo will have to invest in foreign portfolio and real assets to balance its foreign accounts (i.e., the current account surplus has to equal the capital account deficit).
You may, therefore, wish to take up your friend Shinzo on his promise to step up Japanese investments in the U.S. I suggest that, as a minimum, our entire trade deficit with Japan — $68.9 billion – comes back to the U.S. in the form of direct and portfolio investments.
We are very far from that now. The sum of Japanese direct investments in the U.S. during the first nine months of last year ($31.8 billion) and of Japanese investments in our Treasury securities in the first 11 months of 2016 ($13.8 billion) is a pitiful $18 billion.
Second, I suggest that you ask the Japanese to invest the equivalent of their trade surplus with the U.S. in our infrastructure projects. That would allow you to keep the budget deficit down so that the bond and equity markets can better fund our private sector. Please remember, you have to start running a multi-year primary budget surplus of 2-3 percent of GDP just to stop our $20 trillion public debt from rising. Short of a divine intervention, your promise to “wipe out” the public debt is impossible with the current primary budget deficit of about 1 percent of GDP.
Third, don’t believe our financial wizards telling you that they can do the infrastructure. They can’t. Just tell your friend Shinzo to put up the money – presto — and get the JR (Japan Railway Company, east, west, central – we don’t care) to build our bullet trains from sea to shining sea. Bridges and highways should also be part of the deal.
Fourth, do a trade agreement with Japan on the basis of strict, enforceable and results-oriented rules of reciprocity. If you do that, you won’t have to listen to the nonsense that GM, Ford and Chrysler have steering wheels on the wrong side and no dealer networks in Japan. Ditto for agriculture, etc.
Fourth, hug your friend Shinzo again and tell him, within the earshot of NHK cameras, that you got his back totally and unconditionally. But do ask him to sort out his stuff with China and South Korea. He has to get that poison out of the way. If he does that, you can assure him that you will take care of Pyongyang’s nukes and inter-Korean disputes with Beijing and Moscow.
