Some Links

by Don Boudreaux on May 7, 2018

in Balance of Payments, Economics, History, Movies, Property Rights, Seen and Unseen, Trade, War

GMU doctoral candidate Jon Murphy – in a feature article this month at EconLib – asks if national-security concerns justify protective tariffs.  A slice:

One last point on the national defense argument. If China, a national security threat and military threat for influence in the region according to President Trump’s economic advisor Peter Navarro were dumping steel in the U.S. market to gain some military advantage, the logical thing for the U.S. government to do would be not to encourage U.S. exports but, rather, to encourage Chinese imports. Since steel is a scarce resource, sending it abroad (i.e., encouraging exports) necessarily reduces the stock of steel in the United States, whereas imports increase it. If China is dumping, then it means that the product is being sent to the United States rather than being used in Chinese markets; for every unit of steel sent to the United States, that is one less unit that could be used for a Chinese war machine and one more for a U.S. war machine. The logical action for the U.S. government would be to purchase a lot of low-cost steel from China and simply stockpile it, thus depriving China of war materials while maximizing U.S. steel stockpiles. In the event of war, the United States would have a large stockpile from which to draw, while China’s would be reduced.

GMU Econ alum Mark Perry posts a letter from U.S. Senators Ron Johnson (R-WI) and Claire McCaskill (D-MO) to Secretary of Commerce Wilbur Ross demanding that the administration take fuller account of the ill-consequences of tariffs.

Adam Brandon adds his voice to those who are working to sweep away the gargantuan confusions about so-called “trade deficits.”  A slice:

What’s more, the concept of the United States running a trade deficit with other countries is faulty. As economist Mark J. Perry explains, “It might be a subtle point, but it’s important to realize that countries don’t trade with each other as countries — rather it’s individual consumers and individual companies that are doing the buying and selling.”

Certainly, some politicians want to appeal to core constituencies, such as labor unions or companies that rely on antiquated business models, by espousing fear about the trade deficit. Such absurd rhetoric leads to policies that harm American workers and consumers, but it also ignores that we have a capital account surplus and a services surplus.

Sam Staley reviews Little Pink House.

Robert Samuelson isn’t impressed by Bernie Sanders’s scheme for the government to guarantee jobs for everyone who wants one.  (I cannot resist noting the irony that Sanders supports the minimum wage. Sanders, in other words, supports policies that artificially price workers out of jobs and then proposes higher taxes and government interventions to give jobs to workers who cannot find jobs in the private sector.)

David Henderson notes that basic public-choice theory helps us to better understand Cleopatra.

“Human beings are social. But that does not invalidate economics or justify socialism.” – so begins Arnold Kling’s newest essay.

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