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We’ve been warning for two years that trade wars have economic consequences, but the wizards of protectionism told Mr. Trump not to worry. The economy was fine and the trade worrywarts were wrong.
But we never said tariffs would produce immediate recession. We said they—and the climate of uncertainty they were creating for business—would chill global trade and undermine the surge in capital investment spurred by tax reform and deregulation. The growth momentum from tax cuts and a strong labor market were able to mask the impact of helter-skelter trade policy for a time. But that old economic disciplinarian, Adam Smith, sooner or later exacts a price for policy blunders.
Charleston-based developer Vince Graham – who is the best street-namer [3] ever – calls for a more thoughtful approach to issues of urban transportation [4].
Alex Tabarrok recalls a great, important, and timeless lesson about economic dynamism and jobs taught by Milton Friedman [5] – which reminds me of what is perhaps my favorite of all the many letters-to-the-editor [6] that I’ve written over the decades.
David Henderson recalls another day that lives in infamy: August 15, 1971 [7].
Jeffrey Tucker intelligently describes economics as the honey badger [8].
My Mercatus Center colleague Dan Griswold talks with ALEC TV about international trade [9].
And here it’s me talking about international trade; I do so with John O’Donnell and Dawn Landry [10]. I thank John and Dawn for having me on.
In my latest column for the Pittsburg Tribune-Review I explore some of the potential costs and benefits of having high government offices filled with business people [11]. A sizable slice:
The simple reality is that to be skilled at running a business is not necessarily to possess a good economist’s understanding of the logic of the operation of an economy. To assert, as many people do, that successful businessman Donald Trump knows more than do competent economists about how an economy operates makes no more sense than to assert that champion Olympic swimmer Michael Phelps knows more about fluid dynamics than does a physicist specialized in that field.
Just as Phelps swims brilliantly without knowing the first thing about physics, many people succeed brilliantly in business without knowing the first thing about economics.
On the positive side, business people are especially likely to be aware of the downsides of regulations — downsides that elude the typical politician who has no business experience.
The late George McGovern [12], after retiring from politics, bought a hotel and restaurant in Connecticut. Only then did he learn how challenging it is to comply with many of the regulations and taxes that business people routinely confront.
As McGovern wrote with admirable honesty in a 1992 op-ed for the Wall Street Journal [13], “I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.”
This sort of humility, which comes from real-world experience, is in terribly short supply among politicians.