Russ’s latest podcast is a discussion with Mike Munger on the Basic Income Guarantee. And here are Arnold Kling’s thoughts on that podcast. (For what it’s worth, I oppose any and all proposals for a guaranteed income. I understand that such an income-guarantee – were it implemented and carried out in the ways that some of its better proponents advocate – could improve on the status quo. But such policy engineering, which must be conducted by politicians, strikes me as being akin to offering advice to thugs on how their raping and pillaging can be done more efficiently – that is, at lower social cost.)
No one can say with any certainty what the dollar will do on the volatile foreign-exchange markets. Even if the supporters of border adjustment are right, they are ignoring that such a massive move in the world’s reserve currency could send unpredictable shocks through global supply chains and debt markets.
And even if the dollar does strengthen, it’s hard to see how that would help American industries like the oil refiners, whose imports are already priced in dollars. The currency can strengthen or weaken, but the border adjustment will remain effectively a tariff on imported crude.
In 1845, French economist Frederic Bastiat tackled the oft-repeated argument that a negative balance of trade – a trade deficit – is harmful for a country. Trump has repeatedly bemoaned America’s trade deficit, likening it to a company losing money. But Bastiat refuted this notion and challenged its supporters with the following thought experiment: “Suppose, if that amuses you, that the foreigner inundates us with all sorts of useful commodities without asking in return – that our imports are infinite and exports nil. I defy you to prove to me that we should be poorer on that account.”
In Bastiat’s thought experiment, the country’s trade deficit would be enormous – negative infinity! – but this would be a windfall and not a cost to the country. Later, in 1893, economist Simon Newcomb acknowledged that much like today, many people opposed trade deficits. But he pushed back by reminding his readers that trade is a voluntary activity that benefits both parties: “For a century and a half the doctrine entertained and taught by economists is that there can be no trade between two nations which is not advantageous to both; that men do not buy or sell unless what they receive is to them more valuable than what they give in exchange; and what is true of the individual man is, in this respect, true of the nation.”
Bob Higgs reflects on fake news. A slice:
A little-noticed aspect of this ongoing activity relates to the matter of “failed polices.” Government’s critics constantly harp on allegations of such failures in an attempt to sway public opinion in favor of throwing the (current) rascals out and replacing them with the critics’ preferred rascals. Revelations of “scandals,” whether personal or managerial, provide especially useful allegations in the world of fake news. Thus, for example, critics of the government’s so-called drug war(s) constantly allege that these efforts have failed to stem the use and trafficking in such forbidden fruits and therefore ought to be modified or abandoned. Such criticism, whether well founded or not, however, falls victim to the assumption that the policy has failed merely because it has not halted or even reduced drug use and trafficking. But the policy, at least at the federal level of government, has not been altered substantially or abandoned in response to such criticism, and the reason it has proved so durable is that it has decidedly not failed insofar as its principal warriors are concerned. The drug war has brought tremendous infusions of money and power into the hands of its conductors, who would be crestfallen indeed if their effort had succeeded in reducing the use and trafficking they purport to be targeting. Such success would remove the foundation that supports their hold on money and power and hence would prove personally devastating to them, however desirable it might seem to be in the abstract.