Actually, that statement is ridiculous and unacceptable. The idea that a trade deficit represents a “loss” to America (or any country) is stunningly stupid. Looked at through Trump’s eyes, the couple hundred bucks I leave at the Safeway each week is accumulating into a pretty impressive loss... Except I bring food and beverages home from the Safeway, numbnuts . (Granted, when it comes to the bill from my wife’s hair salon, Trump may have a point.) Nearly two and a half centuries ago, Adam Smith made the economic case for free trade in The Wealth of Nations . A lot of folks have tried to disprove his points about butchers, bakers, specialization, division of labor, comparative advantage, and all that common- sense stuff. All have failed. Of course, Smith can be a bit dry, so if you have a rogue Trump supporter in the extended family, suggest she read Henry Hazlett’s classic Economics in One Lesson . Even The Donald could understand it... if only he read. Alas, recently canned Chief of Staff John Kelly is the latest to inform us he doesn’t. Gen. Kelly was keenly aware of another benefit of trade – namely, the old saw that if goods don’t cross borders, soldiers will. That very important insight is usually attributed to the great 19th century French political economist Frederic Bastiat. (No one can seem to cite where he allegedly said it, but it sure sounds like him.) But if economic ignorance has prevented universal acceptance of the superiority of free trade – more goods and services, more employment, higher GDP, etc. – there is a more important reason to support it: liberty.
If I were a (tenured) professor of political science, what would I do? Glad you asked. I would devote the entire semester to listening to the 3700 hours of conversations recorded in the Nixon White House between 1971 and 1973. Forget all the Kennedy School lectures at Harvard by August Scholars of government and the executive branch. These tapes are the real deal: Mediocre minds revealing bigotry and profound ignorance of whatever subject they happen to be addressing. And when they came out to make their grand pronouncements, the international media hung on every word. Gene Healy’s remarkable 2008 book, The Cult of the Presidency , lays out in detail the process through which Americans have come to “embrace a virtually limitless notion of presidential responsibility.” As Healy writes, “A man who trumpets his ability to protect Americans from economic dislocation, to shield them from physical harm and moral decay, and to lead them to national glory – such a man is bound to disappoint. Yet, having promised much, he’ll seek the power to deliver on his promises.” Such a man, of course, currently occupies the White House. Not to disparage him, but Donald Trump is a truth-challenged, narcissistic ignoramus. What he doesn’t understand about economics could fill many libraries, and his specialty in economic ignorance is trade policy. For instance, he is incapable of comprehending that tariffs are taxes on American consumers. At the recent G7 summit in Quebec he said, “We as a nation lost $817 billion dollars on trade. That’s ridiculous and it’s unacceptable.”
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January 2019
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