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Free Minds & Free Markets

'If We Didn't Trade,' Trump Argues, 'We'd Save a Hell of a Lot of Money'

The president's longstanding obsession with trade deficits reveals mercantilist instincts he cannot escape, no matter how much he talks about zero tariffs.

C-SPANC-SPAN"Our trade deficit ballooned to $817 billion," Donald Trump said during a speech to steelworkers in Granite City, Illinois, yesterday. "Think of that. We lost $817 billion a year over the last number of years in trade. In other words, if we didn't trade, we'd save a hell of a lot of money."

According to the U.S. Census Bureau, the president exaggerated the size of the 2017 trade deficit by 48 percent. But that's a mere quibble compared to his fundamental misunderstanding of what that number means, which in turn reflects a zero-sum view of economic exchange that does not bode well for the outcome of a tariff war supposedly aimed at promoting free trade.

"If we didn't trade," Trump argues, "we'd save a hell of a lot of money." But that does not mean we'd be better off, since we would not have all the things we buy with our money, which we clearly value more than the money itself, since no one forces us to exchange one for the other. The analysis is the same whether or not the people who sell us things happen to be located in the United States.

"Without trade, we could have piles of money," Cato Institute trade specialist Scott Lincicome concedes in an interview with The New York Times. "But we'd have no food, clothing, housing, etc. So the money would be worthless, unless you swam in it like Scrooge McDuck or something."

The president, despite his Wharton degree and business career, frequently seems baffled by this concept, prompting corrective analogies from people with a firmer grasp of economics. "When you're almost 800 Billion Dollars a year down on Trade, you can't lose a Trade War!" Trump asserted on Twitter last month. "I'm way down on trade with restaurants, grocery stores, malls, and movie theaters," Rep. Justin Amash (R-Mich.) replied. "I keep buying from them, but they never buy from me. I must be getting ripped off, right?"

As with many things the president says, his comments about trade raise the question of whether he really is as clueless as he seems or is playing dumb as part of some Machiavellian strategy. The answer matters because Trump intermittently says he understands the value of trade and ultimately aims to promote it with his can't-lose war, which he claims will encourage reciprocal reductions in tariffs and other barriers. This week he bragged that his tariffs on European imports had led to negotiations aimed at virtually eliminating trade barriers between the U.S. and the E.U. "I love trade," he declared on Fox News last month. "Trade has always been my thing."

During the presidential campaign Trump also would alternate between portraying trade deficits as inherently bad and praising the principles that make them inevitable. "I love trade," he insisted during a 2015 Republican debate. "I'm a free trader, 100 percent. But we need smart people making the deals, and we don't have smart people making the deals."

Trump has been saying the same thing for at least two decades. "You only have to look at our trade deficit to see that we are being taken to the cleaners by our trading partners," he wrote in The America We Deserve, published in 2000. "Our long-term interests require that we cut better deals with our world trading partners."

Maybe Trump has been putting on a show all this time, so that when he was finally elected president he would be in a stronger bargaining position because foreign leaders would think he was crazy and confused enough to actually believe that "tariffs are the greatest" or that "trade wars are good and easy to win." But the evidence suggests Trump means what he says.

As Veronique de Rugy noted here a couple of weeks ago, "This is one policy area where he's been remarkably consistent over the years." Even when Trump pays lip service to free markets, she observed, it's with the aim of increasing exports and reducing imports so as to bring down the number he thinks crystallizes our failure and lack of resolve. Trump is not talking like a mercantilist in service of free trade; he is talking like a free trader in service of mercantilism.

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  • BestUsedCarSales||

    SQRLY ONE is his speech writer, apparently.

  • Just Say'n||

    Are you in a bad mood today, BUCS?

  • BestUsedCarSales||

    Nope. Just a joke about how SQRLY ONE jokingly says this about trade fairly often.

  • BestUsedCarSales||

    That being said, pretty stressed as I quit my job recently, and am finishing up my last two weeks. Trying to get everything organized to move.

  • Just Say'n||

    Good luck. That can be stressful. I assume that you quit because you have a better offer. Or did you just pull a Jerry Mcguire?

  • BestUsedCarSales||

    I do. I'm moving out to Colorado where I have a job lined up.

  • ||

    'I'm moving out to Colorado'.

    You should write a song about that.

  • Rich||

    Frank Zappa's "Montana" is sublime.

  • Just Say'n||

    Best of luck

  • Red Rocks White Privilege||

    Jesus--you're moving from a relatively affordable city to Colorado? Your pay increase must be significant.

  • BestUsedCarSales||

    I'm moving from Seattle to Colorado. It's much cheaper.

  • Red Rocks White Privilege||

    Ah, that explains it. Yeah, you'll definitely be saving money.

    My PCP told me during my physical that she was moving to Seattle, and she had no idea how she was going to pay her bills.

  • BestUsedCarSales||

    Yeah, and once I have a year or so to set up I can probably get cheaper. I have no particular urge to stay in Boulder city limits for any extended period, and housing costs drop dramatically per sq/ft as soon as you leave the boundaries.

  • mcsandberg||

    Here's why - http://www.boulderblueline.org/about/the-name/ . How's that for nasty? I had a property under contract in Boulder county and the county planners told me that my architect's plans were approved for the site, as long as no part of the structure broke the 5,825' line. That was two feet below grade and they weren't kidding. Fortunately I had engaged a great buyer's agent https://agents4homebuyers.com and they had put a "subject to site plan approval" clause in the contract, so all I lost was time, not money.

    I'm now building in Larimer country.

  • BestUsedCarSales||

    I truly wish that I was able to find a job back in Arizona that wasn't a huge, huge wage cut. I did have one I tried to get, and right in Tucson. I would have seriously considered taking a pay cut to go back to Tucson but sadly did not get that one.

  • Last of the Shitlords||

    Seattle is not relatively affordable anymore.

  • Chipper Morning Baculum||

    Moving back to AZ? Sorry the job didn't work out. Some birds are not meant to be caged.

  • BestUsedCarSales||

    Back to the SW. Colorado. It's Boulder which might be iffy, we will see, but I like the fact that I can easily live relatively rural in that area once I have some more money saved up.

  • Happy Chandler||

    I've heard great things about Boulder. I love university towns!
    Best of luck.

  • Just Say'n||

    This endorsement would sour me on Boulder.

  • Nardz||

    Me too, but I've been to Boulder. Chipper's comment below is spot on

  • DiegoF||

  • BlueStarDragon||

    Note: Here in Colorado, It's the Peoples Republic of Boulder. It's know as the most communist area in Colorado with Denver coming in far second.

  • Chipper Morning Baculum||

    I used to live in Boulder. Fun little town. Great hiking. I hope you like prairie dogs.

  • Red Rocks White Privilege||

    You'll probably have to find a place outside the city if you're looking for anything relatively affordable.

  • BestUsedCarSales||

    Yes, that was my intention. But my roommate really wanted to be in the city and I conceded. So my goal now is to save money and move west into the foothills outside of Boulder. Buy some acreage and build up from there.

  • Chipper Morning Baculum||

    When I lived there, I hear the town council for Ward voted to send themselves to a Greatful Dead show. So maybe look into living there, they seem really chill. On the other hand, they might be nosy do-gooder progs that want to force you to save the earth.

  • Flinch||

    Expect a lack of focus when a nearby university has a bong team.

  • Chipper Morning Baculum||

    You really are a decent and sweet human being, BUCS. I always wish you the best. I especially hope you meet the special lady that will give you the wonderful kids you are destined to have and raise.

  • ||

    That's too nice for this place. Mean that up a little.

  • Azathoth!!||

    I really wonder if you guys have any clue what the man is doing at all.

    I mean, here's a guy who made billions, lost millions, made them back. He's started hundreds of businesses and employs thousands.

    He's had to deal, first hand, with the economic policies he now has some say in.

    And some asswipes who write for a magazine who barely have two nickels to rub together think they know more than he does about economics. They keep screaming doom and gloom and leaping at verbal 'gotchas' as proof that they're right.

    But the economy isn't in the shitter.

  • Chipper Morning Baculum||

    Lol. How many bankruptcies did Trump go through again?

  • ||

    Meh. Plenty of entrepreneurs declare bankruptcy. It's a natural occurrence in a high risk environment.

    I don't necessarily see it as failure.

  • Chipper Morning Baculum||

    You don't see a failure as a failure?

  • ||

    I'm just saying people are overplaying that angle because they hate him.

    These guys play high risk games. Some will work, some won't. Disney and Ford went bankruptcy.

    https://www.entrepreneur.com/article/283377

    https://www.entrepreneur.com/article/292062

  • loveconstitution1789||

    Trump has had failures of business.

    Trump has had triumphs of business.

    Trump beat The Hag (who was supposed to be the greatest female politician ever).

  • Last of the Shitlords||

    He could have taken her head, thereby ending her unholy existence forever, but he might have been subject to a Dark Quickening and became progtarded.

  • Flinch||

    And yet, his approval numbers aren't in the 20's somehow. But more interestingly, are you saying Comey is a Russian operative?

  • plusafdotcom||

    It's not having had failures, CMB, it's the Batting Average... how many Non-Failures versus "Failures"...
    Nobody bats 1.000. .300-.400 is just amazing. What's Trump's percentage, or doesn't anyone think to consider that?

  • Jay Dubya||

    we would need to have his tax returns to know for sure. his personal declarations of his net worth have always been fraudulent. you should read the spy investigation on trump published back on the 80s. his "successes" come in two kinds: piggybacking on the work of other developers (mostly one or two early deals before he became a cancer to NYC investors eg trump tower) or defrauding the bondmarket (eg all of his casinos).
    ironically, his sales pitch to early developers was that he could leverage the corrupt relationships his father had developed in 80s "tammany hall". it takes some incredible mental & ethical gymnastics for self-proclaimed small govt conservatives to look at the cesspool of corruption hes gormlessly lumbered through for decades & decide that this is the guy to clean up washington.

  • The_Hoser||

    Five out of about 500 businesses. That's a pretty spectacular success rate.

  • Azathoth!!||

    The fact that anyone uses those bankruptcies without knowing this--which is a LOT of what passes for 'economists' lately is really sad.

  • BestUsedCarSales||

    A family business is NOT an actual business. It's more like being self-employed, which is why all his actual businesses failed.

    Not to defend Trump, but I do want to defend both self-employed people and family businesses. What exactly is your issue with them?

  • BestUsedCarSales||

    I'm asking you to clarify why they are not a business. What is your definition of a business?

  • Last of the Shitlords||

    "Both based on my near-40 years as an entrepreneur coach/.consultant"

    Oh, you're bullshit artist.........

    https://m.youtube.com/watch?v=oBIxGjSHzF8

  • Mark22||

    So, Hihn, since you are judging other people on the supposed strength of your own resume, tell us: what have you actually accomplished? What innovations are you responsible for? What wealth did you create? Please do tell!

  • Mark22||

    I didn't judge anyone

    I can't tell with you: are you simply senile or dishonest to the core?

  • Mark22||

    And, Michael, the biggest accomplishments you actually list are school board member and water commissioner, a servant of the authoritarian progressive welfare state, consistent with your authoritarian progressives views.

  • buybuydandavis||

    "Left - Right = Zero"

    Bwahahaha!

    Needz moar CAPZ!

  • BestUsedCarSales||

    You didn't use any more caps. You just bolded it.

  • Last of the Shitlords||

    I noticed that too.

    I'm crestfallen.

  • Mark22||

    Other people need spoof accounts, you are your own spoof account.

    I dub thee Michael "Majorana" Hihn.

  • MWG||

    Anyone can set up a corporation in a matter of a couple of days... or do you believe Trump is actively managing the operations of 500 businesses?

  • loveconstitution1789||

    Trump was on the board of hundreds of companies.

    You can simply look at his financial filings when he ran for president.

  • Microaggressor||

    Business experience doesn't give you much insight into macroeconomics, only micro. Remember, one of the driving forces of Keynesian policy is business owners begging politicians to increase their sales. The driving force of protectionism is business owners begging politicians to get rid of competition.

  • crufus||

    Trump is a crook who has spent his entire career defrauding contractors, vendors, investors, customers, and the American public while using bankruptcy as a means of escaping from the people he ripped off.

  • Jerryskids||

    The president, despite his Wharton degree...

    Isn't Trump's Wharton degree about like Obama's birth certificate? Anybody ever seen this mythical piece of paper and isn't it suspicious that he refuses to show it? Everything about Trump indicates he's a pathological liar, why would anybody believe he has a degree from Wharton just because he said so? His say-so's a pretty good indication that he doesn't have a degree from Wharton.

  • KennethJohnKelly||

    His name is printed on the 1968 Commencement Program for the Wharton School of Business and Finance (Bachelor of Science in Economics).
    Was Trump really a top student at Wharton? His classmates say not so much.

  • buybuydandavis||

    Wharton Truther

  • Last of the Shitlords||

    Jerry, Trump says he exists. So that a pretty good indication he doesn't.

  • loveconstitution1789||

    Lefties can never answer why businesses deal with Trump if he rips off every contractor?

    Nobody would do business with him.

    Its much more plausible that Lefties are liars.

  • Last of the Shitlords||

    I no longer accept anything leftists say at face value. It almost never pans out.

  • Flinch||

    Fraud? Now that would be something to prosecute. Why would progs abandon something that solid and go with this "Russian collusion" vaporware? So the dnc got hacked... we can ask why. Governments spy to get information and/or to keep tabs on people. If they were already being fed good information, can we assume the server hacking would not have happened? I have suggested [and still maintain] that keeping tabs on background noise at the dnc was important to the Russians in light of their rather large investment in the Clintons: a loss of narrative control seemed very certain with Hillary going catatonic in public and failing to make even half the stops a normal campaign would undertake. And of course if narrative shifts, adjustments in Russian propaganda must follow.

  • Brandybuck||

    I mean, here's a guy who made billions, lost millions, made them back. He's started hundreds of businesses and employs thousands.


    Here's a guy who inherited his first millions from his dad, who first made them in the cronyiest New York and New Jersey real estate market, who turned them into billions through that same cronyiest New York and New Jersey real estate deals, who uses eminent domain to confiscate old ladies houses to build some casinos on, who gets his politicians buddies to bail him out, and who have gone bankrupt four times. Four times. Once is understandable, twice is a learning experience, three times you start to raise your eyebrows, but four times means you never trust the guy with a dollar bill ever again.

  • Brett Bellmore||

    "Here's a guy who inherited his first millions from his dad,"

    After running his dad's business for him for about a decade. TDS sufferers always omit that part of the story.

    Yes, I'll agree that he did some scummy things while running his business. He's commented more than once that he didn't write the rules, he only ran a business under them. But I'll agree he's not a libertarian, if that makes you happy.

    Neither was the last Libertarian Presidential candidate, for that matter.

  • MWG||

    Business isn't the same as economics... Adam Smith, who you apparently have never read, was quite skeptical of businessmen.

  • JFree||

    And some asswipes who write for a magazine who barely have two nickels to rub together think they know more than he does about economics.

    He knows less about economics than AlGore does fer gawdsake.

    He is proposing to release oil from the SPR in order to lower gasoline prices - ahead of the Nov elections. Which is EXACTLY what AlGore argued (substitute 'heating oil' for 'gasoline') before the Nov2000 election.

    The attempt to use an abject ignorance of economics - in order to propose something that will have the wrong effect - so that one can buy votes/approval from people who are even stupider about economics.

  • Huh18?||

    I no longer have any faith that Trumps imbecile followers will ever see through his nonsense.

  • Fredar||

    You serious? Trump is the one ignoring hundreds of years of economic evidence. Running a business and running a country is not the same thing.

    If you think that trade is bad just because allmighty Trump says so, then stop trading with everyone. Make everything yourself. Including those MAGA caps. See how long you will last.

    We are getting to the point where if Trump said the sky is pink, his fanboys would agree with him. Hate this polarization and tribalism. It's getting worse than Hollywood actors pledging their allegiance to Obama, as if he were a king or something.

  • Shirley Knott||

    Brilliant!
    Who wouldn't rather have money than things?

    smdh

  • Huh18?||

    A lot of people would rather have "things" like vacations,meals and/or entertainment that they can enjoy. I suppose some others would rather be buried with their "wealth".

  • Fredar||

    Money is useless if you can't use it to buy actual useful things. Unless you are Scrooge McDuck I guess.

  • ||

    So what you're saying is Trump is less Hitler and more Jean-Baptiste Colbert?

    Trump is a Mercantilist-Nazi. Now that's a combo!

  • Happy Chandler||

    Economically, he's more of an Andrew Mellon.

  • ||

    I dunno. He seems focused on 'trade surplus' which is pretty mercantilist. And world trade has often been characterized as 'neomercantlist' and not as 'free' or with much success on lowering tariffs necessarily.

    Jesus just look at EU with agriculture and Canada in dairy.

  • Last of the Shitlords||

    "Economically, he's more of an Andrew Mellon."

    In terms of his persona, I see him as more of a Thornton Melon.

  • Flinch||

    I have to say I just can't call this one. Andrew... Thornton... Hmm. The only sure thing is "...whoever wrote this doesn't know the first thing about Vonnegut".
    I miss Rodney Dangerfield. It's a gift to help people not take themselves too seriously.

  • Huh18?||

    Great movie. I was always fond of Longfellow.

  • stuartl||

    Nah. He's a cantaloupe

  • Agammamon||

    I did find that when I moved into the cave in the woods that I saved a lot of money. I mean, my hair is a mess and I'm infested with fleas, its fucking cold as hell at night, and I'm usually only a few days away from dying of starvation, but I'm not giving away any of the cash I have on hand to other people.

    So, I've got that going for me.

  • Robert||

    Steve Smith?

  • Robert||

    STEVE SMITH NOT STARVE AS LONG HIKERS EDIBLE! ALL ELSE TRUE THOUGH

  • ||

    "...As with many things the president says, his comments about trade raise the question of whether he really is as clueless as he seems or is playing dumb as part of some Machiavellian strategy."

    Stay tuned. I guess we'll find out in due time.

    "...because foreign leaders would think he was crazy and confused enough to actually believe that "tariffs are the greatest" or that "trade wars are good and easy to win."

    Well to be fair, the EU/Canada love tariffs too. And I wonder if that last sentence isn't as crazy as it sounds. Trade wars have been a feature not a bug since the WTO's inception. I for one am interested to see this play out.

  • Microaggressor||

    There is real potential to use tariffs, or the threat of them, as a bargaining chip to get trading partners to lower theirs. However, the statements coming out of Donald's mouth don't leave me with much confidence. Like you say, we just have to wait and find out.

  • ||

    I'll copy paste my comment above:

    He seems focused on 'trade surplus' which is pretty mercantilist. And world trade has often been characterized as 'neomercantlist' and not as 'free' or with much success on lowering tariffs necessarily.

  • Rich||

    "You only have to look at our trade deficit to see that we are being taken to the cleaners by our trading partners."

    Korean slur?

  • This Machine Chips Fascists||

    I wonder how Trump evaluates his balance of trade with sex workers. Does he compare his expenditures on domestic v. foreign booty? Or is it strictly Trump v. Big Pussy? How does Melania's cost figure in?

  • sarcasmic||

    Economicus Ignoramicus

  • loveconstitution1789||

    Clearly. Greatest steady US GDP strength in over 15 years.

  • Fred G. Sanford||

    Trump's deficit incurring tax cut and protectionist tariffs were only recently implemented. Their effects haven't been felt yet. But perhaps you are one of the goobers who voted for him and will believe anything.

  • Huh18?||

    Yep. He has been riding Obamas wave since day one. Just like Obama's term had to bail out GWB's tax cuts and trillion dollar wars. The U.S. economy isn't a sports car that can turn on a dime. It's a freight train that takes a LONG time to change direction.

  • Brett Bellmore||

    Nah, it takes a long time to turn in a good direction, but it can turn in a bad direction on a dime. So the very least you can say of Trump is that he hasn't crashed the economy.

  • MarkLastname||

    And every time he rolls out new tariffs the markets quake. Just because shooting your self in the foot isn't fatal doesn't mean you should do it.

  • Tony||

    It's not news that Trump doesn't like paying for things, which is why the only lawyers he can get are senile crackpots. Rudy is probably happy just to be on TV.

  • Brandybuck||

    Trump only hires Yes Men, and I'm sure Rudy's lips were eagerly uttering the word "Yes".

  • BestUsedCarSales||

  • Brandybuck||

    "I'm a free trader, 100 percent. But we need smart people making the deals, and we don't have smart people making the deals."


    The problem with Trump, as well as all progressives and most conservatives, is that they think trade happens by governments. That the "smart people" Trump is talking about consists of government negotiators.

    What rubbish!

    The trade he is talking about happens between two business people, one exporting and one importing. Government trade policy is essentially about restricting that activity, usually through tariffs and quotas. Smart people making deals should be those two businessmen, not dumbasses like Trump who can't even run his own business without an extensive rolodex of government insiders.

    100% free trade means getting government "smart people" out of the way so exporters and importers can get on with their trading.

  • Brandybuck||

    I am only on the conservative half of the two dimensional spectrum only because I know economics. That conservatism as a whole has decided to flush all economic sanity down the toilet in their mad dash to fellate this guy is truly distressing to me.

  • BestUsedCarSales||

    It's one of the best points that Gillespie makes.

    Politics in this country often breaks down into Conservative/Liberal, this may even proceed Democrat/Republican. And so the whole spectrum of human belief, on a huge variety of issues that have no logical connect to each other, is compressed and associated with one of two sides. And this is both silly and unproductive.

  • Brett Bellmore||

    Not all economic sanity. They could be embracing socialism, like the Democrats.

  • Leo Kovalensky II||

    +1000

    All the arguments with our local conservatarians are about convincing that individuals have rights. On trade, immigration, etc they always seem to be defending collectivist rights.

  • Jerryskids||

    We're all socialists now. Collectivists of all stripes have one core belief in common, that the average individual is an idiot not fit to run his own life and needs someone to tell him what to do and how to do it. And the collectivist knows just who that someone is.

  • Mark22||

    Look, we live in the US under the US Constitution. Under the US Constitution, the federal government can impose tariffs and can restrict border crossings. Meaning, under the US Constitution, you do not have an unlimited right to make your own choices in these areas. That's just a fact. If you don't like it, change the laws.

    If we lived in a libertarian world, those rights would not be limited by government. But you would also lose many guarantees that the US government gives you right now.

    What you want is all the guarantees and benefits you receive from the US government, but combined with the negative rights of libertarianism. That's neither a libertarian position, nor is it going to happen. Deal with it.

  • Mark22||

    Only a small minority are anarchists.

    Actually, by definition, no libertarian is an anarchist; they are different political ideologies.

    And you avoided his context entirely. Probably why conservatives are down to about 25% of the population.

    What do "conservatives" have to do with me? I'm a gay immigrant and used to be a Democrat, now independent.

    Unlike you, Michael Hihn, who praises Marx and bigger taxes.

    So you're just as ignorant of libertarianism!

    Well, you're certainly not "ignorant of libertarianism", and you use your knowledge of it to try to destroy it.

  • Last of the Shitlords||

    I'll truck with a gay, immigrant libertarian before I ever would a straight, native born progressive.

  • MarkLastname||

    First of all, just because the state can do something doesn't mean it's not a terrible decision.

    Second, it's idiotic to trot out the old 'since we don't live in libertopia we may as well learn to live this idiotic government policy.' This isn't about some trade off between some public service and the conditions attached to its use; this is about trade policy that is harmful. It's a net drag. If Trump decided we all had to use only our left hands for anything on Tuesdays, would you still be saying "well that's just how it has to be in a non-libertarian society?" No. A stupid policy that causes harm ought to not be pursued. That's the point being made here. You don't have to try to find a way every single time to defend Trump ya know.

  • Jerryskids||

    That the "smart people" Trump is talking about consists of government negotiators.

    I wouldn't take that for granted. You might think when it comes to buying and selling, the people who run Walmart might know more about what's a good deal for Walmart than Donald Trump does, but I'd bet you Donald Trump would tell you he knows more about running Walmart than the people who run Walmart. The "smart people" Trump's saying we don't have could very well be the businessmen trading with China because they're too stupid to know what's for their own good. Trump's the smartest man in the world and knows more about any topic you care to name than any other human being in the history of the universe.

  • JFree||

    The trade he is talking about happens between two business people, one exporting and one importing.

    No it doesn't. In that case, it happens between FOUR entities - the two businesses and the two banks exchanging the currencies or financing the trade. It's those banks in the middle that can end up driving the trade if the currencies themselves are being driven by factors outside the trade requirements of those two businesses.

    And if you think govts are gonna - or even can - get out of being involved with their own currencies (both spot and debt) - well you're very mistaken.

  • JFree||

    As a gut rule of thumb - if tariff rates start approaching or go below currency volatility rates - then continuing to pay attention to tariffs is likely to start becoming counterproductive.

  • Last of the Shitlords||

    Has Art VanDelay weighed in on this yet?

  • JFree||

    It ain't fictitious.

    If lowering tariffs by 1% increases currency volatility (need a better term but this one's close enough) by MORE than that 1%; then lowering those tariffs does NOT increase wealth (ie not a positive sum game anymore). It merely transfers it from the non-financial sector to the financial sector. Lots of different ways that that actually happens (incl compensation based on stock option value - or increased income insecurity for those outside the protected sector) - but that IS what happens.

    The reality is that we probably passed those levels when currencies started to float (late 70's). We certainly passed them when the US dollar became the reserve currency and when the Fed became the world's central bank and started subsidizing interest rates (the 90's roughly). THAT threshhold is why the current free-trade environment is seen as a problem by those who aren't getting those currency benefits.

    And we are in the Golden Age of free trade for the US and the world. It's fucking insane for libertarians to pretend we are in some protectionist world.

  • Mark22||

    The trade he is talking about happens between two business people, one exporting and one importing

    That kind of free trade would be great. Unfortunately, it hardly exists. Businesses in China or Europe do not operate in a free market, they are instruments of government policy and subordinate to state objectives. Nor is that clandestine: both Europeans and the Chinese will tell you so.

  • MarkLastname||

    None of which is relevant to the question of whether tariffs are harmful to Americans. They are. Even imposed on imports from socialist state enterprises. The benefit of free trade to the importer does not depend on the governing system of the exporting country. This is basic trade economics.

  • Mark22||

    The benefit of free trade to the importer does not depend on the governing system of the exporting country. This is basic trade economics.

    First of all, trade with China and Europe is not "free trade" in any economic sense.

    Second, what you are putting in flowery language is the simple fact that if people are willing to sell you crap for cheap, you spend less money on crap, and you consider that a benefit. And it is, in a narrow, short-term, purely economic sense. On average.

    But there are costs as well, some of which are not captured by "basic trade economics". For example, basic trade economics does not tell you what the political consequences are of hostile, totalitarian nations owning large numbers of US factories, or acquiring military technologies to destroy us, or of creating a large, non-working underclass.

  • Brett Bellmore||

    Or, for that matter, whether the situation is sustainable.

    After all, a guy who has two credit cards, and is making the minimum payments on each with the other, can think he's pretty sensible. He is, after all, getting all this stuff essentially for free!

    But the bill eventually comes due.

  • Brett Bellmore||

    "100% free trade means getting government "smart people" out of the way so exporters and importers can get on with their trading."

    Absolutely true, but in order to have actual "free trade", you have to get the government "smart people" out of the way on both sides.

    One side? It's still not free trade.

    Now, how do you get to free trade from a position where one side doesn't have trade barriers, and the other side does? It's just possible that may, in the real world, require the side that doesn't have trade barriers to raise them, and then negotiate a deal where both sides lower them together.

    Which, as near as I can tell, is what Trump is attempting.

  • Texasmotiv||

    It's hard for me to believe that if trump thinks the ideal is free trade he would say things like he is quoted saying in the article. You can't have it both ways. Tariffs can't not be - something you want to take down on both sides - and something that will make you rich. Pick one and let's be real for a second.

  • Brett Bellmore||

    I think it's pretty obvious that Trump's SOP consists of BSing right up until the moment the deal he wanted gets signed. And, sadly, beyond that point, too.

    I'm just pointing out that we don't have free trade now, and Trump has shown some signs of wanting to move us in that direction. He's using the threat of matching the trade barriers our trading partners already have deployed against us to bully them into lowering those barriers.

    It's the difference between slugging it out with a bully, instead of modeling pacifism in the hope they'll adopt it.

  • loveconstitution1789||

    Minute 7:32 has most of the speech

  • Azathoth!!||

    As Veronique de Rugy noted here a couple of weeks ago, "This is one policy area where he's been remarkably consistent over the years."

    Years? WHAT 'years'? The man HAS NO policy record. He's been a politician for less than two years.

    Do you not even notice when you sound like idiots anymore?

  • Echospinner||

    He has been consistent in one thing. If you are going to take risks do it with other people's money.

    That is exactly what he is doing. He is taking a booming economy and gambling with it.

    Why is it booming? Because we are working our butts off. We are innovating, trading, improving.

    Our money, our jobs, our investments. Win win for him.

    Trump is a con artist. A very good one. He understands how to push emotional buttons.

    What does he get out of it? Power and adulation. He does not want to be loved he wants to be worshipped.

  • Happy Chandler||

    Is the economy booming? I don't really see it. It's mostly on the same trajectory it was under Obama.

    The stock market got a big boost because there was a big spike in deficit spending, borrowing money and sending it to the biggest companies. Very little has trickled down to the workers.

  • Last of the Shitlords||

    The stock market started on to big boost when atrumo got elected, and vpbefore he even took office. As our long national nightmare known as Obama would finally end, and would not continue under The Hag.

  • Brett Bellmore||

    All I can say is that it's booming around here, (Greenville) and my employer is looking at purchasing additional capital equipment, because we're just about maxed out on capacity and the orders are flooding in.

    In fact, I'm kind of worried about the next couple of months, because there's only us two guys to design the new tooling. It's going to be a busy few months.

  • ||

    In the end, Trump may or may not make things better.

    When Trump sends $12 billion of tax money to soy farmers or whoever else got hit by the Chinese's strategically placed counter-tariffs, he's already making things worse. No need to wait for "the end".

  • Last of the Shitlords||

    So stick with the status quo and meekly beg our international trading partners to not make it any worse?

  • Mark22||

    So in your bizarro world view, China is committed to free trade, doesn't subsidize any of its industries, and just wants to engage in free market transactions with the US, while Trump is an anti-free market fascist who is just trying to hurt the libertarian Chinese government? Or what exactly are you saying?

  • Mark22||

    (snort) HE SAID THE EXACT OPPOSITE, GOOBER.

    No he didn't, Goober.

  • Last of the Shitlords||

    He's cycling off his meds again. It's starting.

  • Mark22||

    The Precious Snowflake was "triggered" again.

    You sure were triggered again. Now take your meds and calm down again. Your two minutes of hate are over. And your buffoonery is amusing only in limited doses.

  • buybuydandavis||

    Reason's obsession with Open Borders reveals Anti Democratic, Globalist instincts they cannot escape, no matter how much they talk about muh principles.

  • Mark22||

    It's even more naive for free trade advocates that trade deficits are not a problem, in particular given that the trade deficits are with hostile totalitarian nations who are taking over more and more of our economy and businesses, and the trade deficits themselves are the result not of free market choices, but deliberate economic and political strategies of America's enemies.

  • MarkLastname||

    Yeah, the Chinese government is secretly plotting to take over our country by buying stock in Wendy's.

    The comments section here really has gone to shit. Free trade is controversial on a libertarian forum? Fuck it, let's ban air travel to all those bad countries too! Don't want them to get our tourist dollars.

  • Mark22||

    Yeah, the Chinese government is secretly plotting to take over our country by buying stock in Wendy's.

    While you believe that the foreign communist governments buy US companies and properties... why? To help out failing capitalists? What?

    Free trade is controversial on a libertarian forum?

    You're not advocating "free trade".

    The comments section here really has gone to shit

    You said it: it's full of people like you.

  • Fred G. Sanford||

    The 17th century called...it wants its economic theory back.

  • loveconstitution1789||

    Super high and steady GDP?

    I guess the USA is going to rock free trade like its 1676!

  • Mark22||

    Ummm, the 1700s were very high tariffs, And recessions were quite common until the Fed (which exchanged recessions for inflation)

    Are you so gullible that you really believe that b.s.? Look at some actual data: the Fed is somewhere between useless and harmful. It oversaw the Great Depression FFS.

  • Mark22||

    Hey dumbfuck. How frequent were recessions before the Fed

    Well, the fact that you need to ask shows that you should look it up. The answer will surprise you.

    Hence my point: "the Fed is somewhere between useless and harmful."

  • JFree||

    Tariffs are fucking irrelevant now. They've been irrelevant in the US for a few decades now - and have been irrelevant in most of the rest of the world for a decade or so.

    What is driving the problem now is CURRENCIES.

  • ||

    If we didn't buy food, we'd save a hell of a lot of money.

  • Salero21||

    LOL.

  • Salero21||

    Tariffs, Trade wars, the Wall, and now Trump's Mercantilism are all Stupid. Trump is acting like the DRAFT-DODGER he is.

  • Salero21||

    The Fascist is now also a Mercantilist? Wow I'm seen things. Any and ALL brands of Socialism are Stupid.

  • JWnTX||

    Just so I've got this down, the trade deficit that's created by skewed markets corrupted by foreign tariffs is in the US's best interest because? We want to supply their workers with jobs and raises while ours go begging? The idea that tariffs and other barriers to trade are only bad if the US does it is stupid. True--starting a tariff regimen when both countries are on a level playing field and trying to outcompete each other is a detriment to both country's peoples. But claiming that Europe or China should be able to slap tariffs on anything they want to protect their workers while ours are sacrificed at the alter of global trade is moronic beyond my comprehension. Please--edify me.

  • Elilis Wyatt||

    Just so I've got this down,

    You do not.

    But claiming that Europe or China should be able to slap tariffs on anything they want to protect their workers while ours are sacrificed at the alter of global trade is moronic beyond my comprehension.

    You've displayed a total lack of comprehension, throughout,.

    Please--edify me.

    It seems too late to save you.

  • Brett Bellmore||

    You know, before the Journolist scandal, whenever the media adopted a uniform "take" on the news in a matter of hours, I thought, "what an amazing example of flocking behavior".

    Now, I realize that they're all saying the same thing because they're actually coordinating it in secret.

  • antodav||

    This article seems to conflate microeconomics with macroeconomics. Libertarians often seem to do that and I'm not sure why. No one expects individuals to produce more than they consume, but nations? Especially highly industrialized ones with plenty of resources like the U.S.? Of course they are better off with a trade surplus instead of a deficit. We have always had a surplus at the peak moments of our prosperity. Having a trade deficit ties directly into higher unemployment rates and lower wages, particularly for lower-class, unskilled workers. We cannot survive as a service economy alone. We have to make and sell things in order to be wealthy.

    It also has something to do with national pride, which I guess doesn't resonate very well with libertarians because of their atomistic worldview. Particularly for working-class people there is something very important about knowing that we make something, and that the product of our hands and our labor is consumed and enjoyed by the rest of the world. There is a greater dignity to that than simply working at Wal-Matt or shining someone else's shoes. I guess if you come from an upper middle-class background, are college-educated, and accustomed to working at a desk job, that's a much more difficult concept to relate to as well. But what Trump is saying here makes perfect sense to me.

  • MarkLastname||

    Trade deficits correlate with low unemployment. Stop making shit up. You might have time to read a little on the subject if you stopped wasting time trying to grow your own coffee beans and rubber trees in the US instead of importing them from countries that have a *comparative advantage* in those things.

    Also, national pride is a terrible concept that has killed almost as many people as socialism. Try accomplishing something yourself to be proud of instead of pretending you did so because someone from the same side of the border as you did.

  • Mark22||

    You might have time to read a little on the subject if you stopped wasting time trying to grow your own coffee beans and rubber trees in the US instead of importing them from countries that have a *comparative advantage* in those things.

    Free trade would be great, in particular in agricultural goods. Unfortunately, that has little to do with China and Europe.

    Our trade with China and Europe is exchanging disposable consumer crap for long term investments, and that is a bad deal for any democracy to make.

  • Brett Bellmore||

    Well, it's a bad deal unless you're planning on repudiating all those debts at some point. Which I kind of figure is the game plan now: Run up the card and then laugh when they try to collect.

  • Mark22||

    Not going to happen. China and Europe are using their surpluses to buy political power in the US, in the form of land, companies, IP, and politicians.

    Even if that were the plan, it would be stupid: a short term fraud and a destruction of long term trust in the US

  • Brett Bellmore||

    It would be stupid if we had a choice about it, rather than a choice about the timing.

    Look, when a person gets too deep into debt to ever get out, eventually repudiating at least part of that debt becomes inevitable. A person in that situation has two options: Either they embrace the debt as a moral obligation, and pursue a strategy of austerity designed to minimize the extent of the default, or they reject the debt as a moral obligation, and pursue a strategy of taking every cent they can from their creditors before they wise up to what's coming, and putting it into assets the creditors can't get at.

    In either scenario default and the destruction of your capacity to engage in further borrowing is inevitable.

    Don't you think Trump is more the second sort of guy?

  • Brett Bellmore||

    I should add that the first approach is politically unsustainable in a democracy, so there really isn't much choice at all, just a question of whether the second scenario is pursued competently or incompetently.

    I trust Trump to take our creditors for all they're worth a lot more than I do the average politician.

  • Praveen R.||

    Funny how Trump has no problem doing deals with other countries for his hotels. Imagine his outcry if trade hurdles were set up over such ventures.

  • vek||

    Traditional free trade theory is essentially a mathematical equation... The problem is that it doesn't include all the variables it needs to to actually pencil out in reality. Employment levels, wages, taxes paid by domestic workers/companies, welfare, fiat currency implications, asset ownership, etc are all completely absent in the original overly simplistic theory.

    For it to work out as a net positive it requires at least 2 things to happen after you begin importing stuff and lose the jobs that used to domestically produce said goods: It doesn't increase unemployment, and it doesn't reduce the wages of the employed in their new jobs versus their old. Both of these things have objectively NOT been the case. We have more unemployment and lower wages.

    Trade is often good, but it is silly to assume it is ALWAYS good in every single instance.

    An example: If you can save 1% on the cost of goods by importing them, is that worth it? You're saving 1%! Well, the answer is no. Because you are taking 100 billion in domestic economic activity, AND all that money being respent in the domestic economy, and exporting it in the form of 99 billion going abroad to foreign owners who will then use it to acquire even more assets and income that will no longer belong to the locals. You have to make up for that $99 billion somehow.

  • vek||

    The 1 billion in savings CANNOT POSSIBLY make up for 99 billion in lost domestic productivity via additional standard of living or investment. Where it would work is if those people started doing something different that was also 99 billion in value, or higher. But that hasn't happened in the USA, wages and employment are down in the demographics that lost those jobs.

    Now if you saved 75% by importing you would only need to "make up" for 25 billion in lost domestic activity, which would likely be easy. The problem is many imported goods are only 10-20% cheaper after shipping costs etc, so many fall into the "it's damn near impossible to make up for the losses" territory. Hence some trades are awesome, and some are not awesome. Reality is usually grey scale, not black and white, trade is no different!

    You can always argue the moral side of things, that people should be able to trade with whoever they want, even if it has bad results for the national economy overall... But the practical argument it not black and white, and most people care more about the practical side of things than the moral side.

  • Brett Bellmore||

    Yeah, that's the thing: The argument for free trade keeps getting made on a theoretical and ideological level, but whether it's actually beneficial, and beneficial to who, is largely an empirical question, not theoretical.

    In theory, you get the savings, and the domestic sources just switch to doing something else, and there's a net benefit. In practice, friction in the economy can mean that the second step doesn't really take place enough to reach a net benefit.

  • vek||

    Yup. The truth is that there are only so many jobs available at any given time in high value industries. For instance right now there is simply not enough demand to have 1 billion IT workers making 6 figures. Maybe someday, but not now. So we threw away a ton of mid value jobs in manufacturing and replaced them with lower value service jobs... Which is a net loss.

    Also never discussed is that any given nation cannot possibly have their whole population working in high value jobs, because many people just aren't smart enough. There are IQ thresholds for doing lots of different work, and at a certain point you just can't have more people doing those jobs even if the demand exists, because the people available to work are simply not capable of doing the work! You can import high IQ people if you have the demand, but you cannot take an 85 IQ guy and educate him into being a high level programmer.

    So when a country throws its low and mid tier industries under the bus like we have, with the assumption they will switch to doing higher value work... It simply doesn't work. The people who were working in factories 20 years ago were largely never PHD level people to begin with. So when you snatch away the mid tier, and they can't rise up to the higher tiers, that means they can only go down from there! Which is EXACTLY what has happened with millions of people.

  • Buy good backlink||

    Yes, why is it booming? Because we are working our butts off. We are innovating, trading, improving.

  • TECHNCAL STOCK RESEARCH||

    AMAZING TOPIC
    As with many things the president says, his comments about trade raise the question of whether he really is as clueless as he seems or is playing dumb as part of some Machiavellian strategy. The answer matters because Trump intermittently says he understands the value of trade and ultimately aims to promote it with his can't-lose war, which he claims will encourage reciprocal reductions in tariffs and other barriers. This week he bragged that his tariffs on European imports had led to negotiations aimed at virtually eliminating trade barriers between the U.S. and the E.U. "I love trade," he declared on Fox News last month. "Trade has always been my thing."Technical Stock

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