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Boston Globe columnist Jeff Jacoby eloquently explains why the incessant fretting over America’s trade deficit is utterly unjustified [2]. Two slices:
Imagine an American household with a Japanese car in the garage, whisky from Scotland in the liquor cabinet, Costa Rican coffee in the pantry, wineglasses from Austria in the kitchen, a laptop from Taiwan on the desk, and a deck built from Canadian lumber in the backyard. The family in that house has a lifestyle that plainly relies on imports. Is that evidence that its fortunes are declining? Obviously not. Its ability to exchange dollars for such an array of products from around the world is an indication of its economic strength. That family may be running a trade “deficit” with the rest of the planet. So what? That means it is blessed with access to a variety of products it could never create for itself.
What is true for individual families is generally true as well for companies, industries, and countries. Economists explain that more imports — and a wider trade deficit — are not a drag on US growth but the opposite. According to Mark J. Perry of the American Enterprise Institute and the University of Michigan, more than half of all imports [3] are raw materials, capital equipment, or intermediate components, which US manufacturers use to produce new domestic output while employing millions of Americans. No surprise, then, that increases in the US trade deficit have been broadly associated over the years with rising employment levels.
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Unlike a budget deficit, a trade “deficit” isn’t a debt we owe. It is an accounting entry that tells us how much more we were enriched by foreigners than they were by us. In March [4] Americans received $352 billion in foreign-produced goods and services in exchange for just $242 billion in exported American products. The difference — $110 billion — will flow back to the United States as capital for investment.
From surging inflation to snarled supply chains, the US economy has some real problems. Happily, the trade deficit isn’t one of them. Imports are good. And more imports? They’re good too.
Mr. Biden again blamed inflation on the pandemic and Vladimir Putin [6], omitting that Democrats poured kerosene on the accelerating economic recovery last March with their $1.9 trillion spending bill. Inflation was already at 7.9% when Mr. Putin invaded Ukraine (see the nearby chart). At the same time, their policies are hampering the supply side of the economy in myriad and interconnecting ways.
Consider energy and food. The Administration’s war on oil and gas created enormous regulatory uncertainty that is stanching investment in new production despite high energy prices. Producers can’t find workers. Many left the industry when prices nose-dived early in the pandemic and are reluctant to return because Democrats have promised to put drillers out of business.
Then there’s the left’s blockade on pipelines, which is limiting natural gas production in the Northeast’s rich shale deposits. Progressives blame rising gas prices on natural gas exports, but the larger culprit is increasing demand in the U.S. Hefty subsidies for wind and solar forced coal and nuclear plants to close down, but renewable power needs to be backed up by more gas.
George Will reports on banana-republic-like criminal (in)justice in Texas [7]. A slice:
[Erma] Wilson, represented by the Institute for Justice, hopes to penetrate the shield of immunity that protects prosecutors from paying financial damages when they violate defendants’ constitutional rights. Violations are frequent, nationwide; redress is rare.
Gary Galles warns of government efforts to ‘protect’ citizens from misinformation [8]. A slice:
Obama reminded me of New York Times writer Kevin Roose [9]’s call last year to create a “reality czar”-led government task force to root out disinformation, despite a history of government and its acolytes disseminating misinformation, clear biases, and suppression of those with different views. If that job was in academia, it would no doubt be called the “George Orwell Chair,” adding “of truthiness” if Steven Colbert was one of the donors.
So who could be trusted as the reality czar? No one. That is why Democrats never suggested one when Trump was in office. In politics, truth is subservient to power. Further, any attempt to provably establish the truth when it is in doubt would be littered with obstacles and controversies, and often beyond possibility, but it would create a clear path to eviscerating Americans’ freedoms. So only a person indisputably committed to both truth and freedom could possibly be trusted to lead such an enterprise. Is there anyone who qualifies? That looks like a nearly empty set.
Wall Street Journal columnist Holman Jenkins describes today’s antitrust regime as a “machine running downhill toward decadence.” [10] Another slice:
A distinctly new era of ridiculousness, though, may have been inaugurated with the Trump administration’s failed case to break up the merger of AT&T and Time Warner, a meritless lawsuit launched (and disposed of by the courts) for political reasons that only began [11] with then-President Trump’s animus for CNN (a Time Warner cable channel).
Is Lina Khan, the Biden administration’s Federal Trade Commission chief, about to commit a similar folly over Microsoft’s videogame deal?
She owes her position to a graduate-school paper she wrote decrying Amazon [12] as an antitrust threat; she was hired to fulfill a Biden woke talking point about Big Tech. But though the Activision deal qualifies as big and Microsoft qualifies as tech, a case would hardly fit the bill in any other way. In desperation, advocates of a lawsuit point to Microsoft’s incentive to make certain games exclusively for its own Xbox platform. But even so, Microsoft would have every incentive also to make games for rival platforms and the world’s six billion-plus smartphones. How is this even a fit concern for the coercive powers of the state?
Ms. Khan is perhaps supple enough of mind to be rethinking already her youthful priors as a result of the demand she’s feeling to bring an ill-advised lawsuit. Maybe she will become a libertarian (antitrust has that effect on people when seen up close).
Randy Holcombe has read carefully Justice Alito’s leaked draft opinion in Dobbs [13].
GMU Econ alum Rosolino Candela celebrates the great GMU Econ emeritus professor Richard Wagner upon his, Wagner’s, retirement [14]. A slice:
There are rare instances in one’s life where one can reflect back and say that they were in the presence of greatness and were aware of it. As I reflect back on my experience as a student of Professor Richard Wagner [15] in his Ph.D. courses at George Mason University, this was certainly one of those rare instances for me. His ability to communicate simple yet profound points in economics (for example, “prices are a set of traffic signals, not a set of marching orders” or “the magic number in markets is 2, and the magic number in politics is 3”) is unmatched by any living economist from whom I have had the privilege of learning. Moreover, if I have learned anything from Professor Wagner, it is imperative to take our existing body of knowledge and be creative as a teacher to communicate such knowledge in new and effective ways.
James Patterson is rightly appalled by Adrian Vermeule’s “common good constitutionalism.” [17]