Wielding tariffs (or the threat thereof) as a foreign policy cudgel works for that purpose only because we have a dominant economy, and what's merely painful to us can be crippling to other countries. Still a hard sell for me to think economically screwing the citizens of non-belligerent countries is good policy.
It's almost as if our political elites never learned about the theory of comparative advantage. Poor David Ricardo must be turning in his grave.
By the way, as someone who lives in El Paso and spent 11 years working across the border in Cd. Juarez, your opening paragraph really caught my attention.
I have very fond memories of our day trips to Juarez as a kid, but never considered it on any recent trip down to El Paso. It's sad how tough it is to go back and forth for everyday people.
Why do we have money? Mostly to buy goods and services. We are buying more goods and services from Canada, Mexico, and China than they buy of our stuff. That means we are getting more of their stuff, at a discounted price than we could get it in the United States. I would much rather have stuff I value at a discount than buying it from companies in the United States at full price.
Here! other country. Take my money. I will take your stuff. The trade deficit means the US is enriched with more stuff and the other country is stuck with our cash which they now need to do something with, like invest in the US. Imports are great for consumers. Exports are great for American companies. Trade helps all involved in the transactions.
People who want tariffs have it exactly backwards. We measure the trade in dollars, but we should be valuing the stuff that we get, not the money we are spending.
Very well explained! I think a very small part of the issue is society give a negative connotation to the word deficit no matter the context. Great article!
You didn't mention VAT taxes in your analysis. The VAT seemly operates as a tariff and is used by most countries other than the USA. Mexico, for example, has a 16% VAT which applies to almost all imported goods and services. The USA has sales taxes in some jurisdictions but so do many other countries. Why is this not newsworthy?
Henry Hazlitt has a sad
Wielding tariffs (or the threat thereof) as a foreign policy cudgel works for that purpose only because we have a dominant economy, and what's merely painful to us can be crippling to other countries. Still a hard sell for me to think economically screwing the citizens of non-belligerent countries is good policy.
Great work as usually. Thanks for the shoutout
It's always nice to have something come out before some big news item!
It's almost as if our political elites never learned about the theory of comparative advantage. Poor David Ricardo must be turning in his grave.
By the way, as someone who lives in El Paso and spent 11 years working across the border in Cd. Juarez, your opening paragraph really caught my attention.
One more thing - Go Hokies!
I have very fond memories of our day trips to Juarez as a kid, but never considered it on any recent trip down to El Paso. It's sad how tough it is to go back and forth for everyday people.
Go Hokies!
Why do we have money? Mostly to buy goods and services. We are buying more goods and services from Canada, Mexico, and China than they buy of our stuff. That means we are getting more of their stuff, at a discounted price than we could get it in the United States. I would much rather have stuff I value at a discount than buying it from companies in the United States at full price.
Here! other country. Take my money. I will take your stuff. The trade deficit means the US is enriched with more stuff and the other country is stuck with our cash which they now need to do something with, like invest in the US. Imports are great for consumers. Exports are great for American companies. Trade helps all involved in the transactions.
People who want tariffs have it exactly backwards. We measure the trade in dollars, but we should be valuing the stuff that we get, not the money we are spending.
Very well explained! I think a very small part of the issue is society give a negative connotation to the word deficit no matter the context. Great article!
I only recently realized that some politicians think a trade deficit and a budget deficit are the same thing.
You didn't mention VAT taxes in your analysis. The VAT seemly operates as a tariff and is used by most countries other than the USA. Mexico, for example, has a 16% VAT which applies to almost all imported goods and services. The USA has sales taxes in some jurisdictions but so do many other countries. Why is this not newsworthy?
just one of those mysteries beyond understanding