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If there was any doubt before now, there can be no doubt going forward: we Americans are today governed by imbeciles. Really. Literally. No hyperbole here.
There is simply no way to explain the contents of this May 2019 U.S. Treasury report [2] other than to recognize that it is the product of people completely untethered to economic reality and utterly ignorant of the economics of trade. The entire report is a Niagara of nonsense, but this one short sentence, from page 3, alone is sufficient to justify the classification of its authors as imbeciles.
Beginning with this Report, Treasury will assess all U.S. trading partners whose bilateral goods trade with the United States exceeds $40 billion annually.
Had the authors instead written “Beginning with this Report, Treasury will assess all U.S. trading partners whose bilateral things-whose-names-start-with-the-letter-‘C’ trade with the United States exceeds $40 billion annually,” or “Beginning with this Report, Treasury will assess all U.S. trading partners whose bilateral things-colored-purple trade with the United States exceeds $40 billion annually,” the authors would more readily be recognized for their imbecility. Why the tangibility of the objects of trade has some economic relevance that is not possessed by the names or by the colors of the objects of trade is, and will always be, a mystery to me.
John Cochrane does a superb job exposing some of this Treasury report’s idiocy [3]. Here are two slices from Cochrane:
Bilateral trade “deficits” are meaningless. China sends us shoes, Australia sends China coal, the US sends Australia airplanes. Pieces of paper flow the other way. We all come out ahead despite three bilateral “deficits.” (In quotes as this is a horrible word too, implying something is deficient every time you go to the Starbucks and suffer a coffee trade “deficit.” )
Bilateral goods deficits are even more meaningless. Italians send us prosciutto (goods), we send them software (services), and this is somehow a problem reflecting “currency manipulation?”
……But by this document the Treasury is institutionalizing nuttiness — setting up rules and procedures that monitor bilateral goods “deflcits,” and waste our Nation’s vanishing prestige haranguing countries about their “macroeconomic policies” that produce such undefined and ill-measured ephemera.