President Trump: The NEW one and only politics thread

For these conversations, trade means goods produced in one country that get exported to another country. As I said, though, supply chains are global, and they don’t measure this accurately. Your iPhone or your TV or your car may have parts that originated in many countries. But if the iPhone was assembled in China, they count it as a Chinese import. ... and the idiot in the White House turns it into a narrative of the Chinese ripping us off. Even though consumer demand for those phones demonstrates that people make the choice to trade their dollars for them. We don’t need some overgrown blow hard to manage those kinds of decisions for everyone. It will make things more expensive and decrease choices.

And those balance of trade numbers only measure manufactured goods and other physical goods and commodities. The U.S. can’t compete in manufacturing because it got too wealthy. Our workers won’t work cheap enough to give us all the cheap stuff we want to gobble up. What the U.S. does still export to the rest of the world are services. In some area, such as finance, we export a huge amount. Higher education is another thing we sell to the rest of the world. Those things don’t get measured in the balance of trade numbers, though. Add them, and it lessens the deficits.

Again, though, trade deficits in and of themselves are not a bad thing. And it doesn’t amount to us getting “ripped off.” We get stuff for our dollars. If you want to change that balance of trade dynamic, the most destructive way is to appoint a dictator to impose tariffs, or taxes or regulations. To change, Americans need to forgo consumption and save instead. Saving creates investment. But our savings rate has dropped to next to nothing. We not only crave more and more toys, and collectively made the decision to get fatter and happier, we are largely consuming more and more on credit, not by producing things we can then sell to pay for the relatively wealthy lifestyle.

 

Trade doesn’t land in anyone’s favor. ... unless you are being forced to accept things you don’t want. When you go to the store and trade some dollars for some milk, you don’t see it as an exchange that landed in the store’s favor. You see it as buying milk. The rhetoric Trump is using appeals to ignorance. People who want a villain we need to fight. But this is mercantilism. It’s archaic. And it is frustrating, because Adam Smith, David Ricardo and others spelled this out with reason in the 1700s! And it is immutable.