China and the EU: Beggaring Neighbors

Paul Krugman is wrongly beating up on the EU for its current account surplus, showing that it is now larger than China's. The problem with the comparison is that China is an extremely fast growing developing country. This is the sort of place that in the good old days we expected to run trade deficits.

The EU on the other hand is a bloc of slow growing rich countries. We would expect them to be running trade surpluses. This does not negate the fact that the EU could and should be doing much m...