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Quotation of the Day…

… is from page 538 of C. Donald Johnson’s 2018 book, The Wealth of a Nation: A History of Trade Politics in America:

[Peter] Navarro explained his approach to eliminating the trade deficit to the Wall Street Journal in terms that would be familiar to the eighteenth-century mercantilists and to the Germans during the interwar years under Hitler’s fiercely nationalistic Minister of Economics H.H.G. Schacht, who negotiated bilateral barter agreements. It is the very approach Cordell Hull fought against in the 1930s when establishing the nondiscriminatory MFN [most-favored-nation] trade program. “Any country we have significant trade deficit with needs to work with us on a product-by-product and sector-by-sector level, Navarro declared, “to reduce that deficit over a specified period of time.” This simple formula might seem reasonable in a government-controlled , nonmarket economy ruled by national socialism or communism, but it is less than practical in a market-driven economy. Trade agreements are about balancing the legal rules of trade; they are not intended to change the economics of supply and demand.

DBx: Trump is applauded whenever he declares that America will never be a socialist country. Of course, I hope – I fiercely hope – that he’s correct. But this hope is not grounded in any confidence in Mr. Trump: his trade policies are a mash-up of many of the same superstitions, fallacies, and fatal conceits that motivate self-declared socialists such as Alexandria Ocasio-Cortez and Bernie Sanders – as well as the likes of Elizabeth Warren and other arrogant interventionists – to peddle arrant economic nonsense.

Trump’s and Navarro’s obsession with bilateral trade deficits is sufficient evidence that their economics is balderdash from top to bottom, back to front, inside and out. What Navarro is quoted above as saying about bilateral trade deficits – and what Trump routinely says about such deficits – is the economic equivalent of the rantings of fevered people gripped with fear that Godzilla will soon ravage Manhattan or that Count Dracula will tomorrow lead a horde of vampires to suck the blood out of all our women and children. I do not exaggerate, for that’s how utterly untethered from reality Navarro and Trump are when they talk about trade.


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