This essay by Scott Lincicome is on the long side, but it is well worth reading carefully – including reading what’s at the generously supplied links. (HT my intrepid Mercatus Center colleague Veronique de Rugy)
Here Scott exposes as being a facile fabric of fallacies the narrative told by the likes of Tucker Carlson, Sam Hammond, and many others that selfish American “elites” sold ordinary Americans down the global drain by allowing Americans to trade more freely with the Chinese.
And just fyi, it’s through-the-looking-glass – and shockingly – absurd that, in the tale told by Carlson, et al., “elites” are accused of visiting an injustice on ordinary people when, specifically, what the “elites” are accused of doing is simply removing themselves and their agents from obstructing the economic choices of ordinary people.
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The noneconomic views of trade all seem to stem from a common root: the tendency for human beings to emphasize tribal rivalries. For most people, viewing trade as a rivalry is as instinctive as rooting for their national team in Olympic basketball.
The trade deficit is measured by the difference between imports and exports, so a decline in exports will increase the trade deficit if imports remain constant. Yet exports may decline because an expanding internal economy has siphoned domestically produced goods away from world markets. American producers are selling to other Americans rather than to foreigners. So a trade deficit can be caused by an expanding domestic economy – which is a sign of economic health rather than sickness.
The nation as such is not a large subject that has needs, that works, practices economy, and consumes; and what is called ‘national economy’ is therefore not the economy of a nation in the true sense of the word. ‘National economy’ is not a phenomenon analogous to the singular economies in the nation to which also the economy of finance belongs. It is not a large singular economy; just as little as it is one opposed to or existing along with the singular economies in the nation. It is in its most general form of phenomena a peculiar combination of singular economies.
At the heart of economics is a scientific mystery: How is it that the pricing system accomplishes the world’s work without anyone being in charge? Like language, no one invented it. None of us could have invented it, and its operation depends in no way on anyone’s comprehension or understanding of it. Somehow, it is a product of culture; yet in important ways, the pricing system is what makes culture possible. Smash it in the command economy and it rises as a Phoenix with a thousand heads, as the command system becomes shot through with bribery, favors, barter and underground exchange. Indeed, these latter elements may prevent the command system from collapsing. No law and no police force can stop it, for the police may become as large a part of the problem as of the solution. The pricing system – How is order produced from freedom of choice? – is a scientific mystery as deep, fundamental, and inspiring as that of the expanding universe or the forces that bind matter.
