It's kinda funny that Americans look at the German economy and think they want to be in that situation. You would rather have an economy based on manufacturing cars, rather than one based on leading in tech? You sure?
In contrast the US economy is service-based and thus isn't constrained to scale their prices up so much. Of course manufacturing becomes very hard to maintain when skilled workers can earn >100k.
All stats show that top US tech companies earn incredible amounts of money but their share of GDP growth isn't as big as the Mag7 share of the stock markets makes you think. (<15% of GDP growth in 2024)
- Milton Friedman
Being obsessed about trade deficit is missing the forest for the trees. If you can run a successful modern economy just by sending out slips of paper, that's a great deal.
That said, even Friedman made a caveat for national defense. If war breaks out and you have no manufacturing capacity, there are theoretically bad problems there.
It also doesn't account for cultural concerns. Maybe a country that doesn't have enough manual labor jobs develops weakness and stagnation?
Cars are great: we need good cars, but more than that, we need good tools to fix the cars.
Taiwan make/have some of the best tools in the world. There's no reason the USA can't do the same. We once did.
I do buy good Taiwanese-made tools unless there's a better American-made tool.
Probably wouldn't work out well, but that is the shiny object they are transfixed on.
Ironically, PPP is exactly the kind of myopic metric Germany would use to self-access right now.