All Kling, all the time

It's been too long since I visited Arnold's pages. He has a nice piece on how the more diverse an economy becomes, the more resistant it is to shocks. This is exactly right -- people who complain about how uncertain the economy is today have no comprehension of the magnitude of the business cycle in years gone by. The US economy is smoother by far than it has ever been in its history, although it may not feel like to right now.

It's also worth knowing that, for all the talk of globalization, the US economy is essentially closed. Only about 12% of US GDP comes from trade, and 90% of that is between Canada and Mexico. This is not true for Canada and Mexico, however, where a substantial portion of their GDP comes from trade with the US. In terms of trade, the rest of the world does not register on the US radar screen, but I don't know what it looks like from the other side.