But the main reason why the trade deficit has grown in recent years is that Americans are choosing to buy more stuff from abroad. There is absolutely nothing wrong with that. Trump’s tariff plan amounts to a massive tax increase on Americans whose decisions the former president doesn’t like.
As my Cato colleague Clark Packard and I argued in a recent paper, there’s surely a better approach to U.S.-China relations than the clumsy bellicosity both political parties have recently embraced. But it’s especially wrongheaded for U.S. policymakers to let China — which does raise unique challenges — dictate overall U.S. trade policy, given that the vast majority of U.S. trade is conducted with people in countries other than China.
In particular, the latest data from the U.S. Bureau of Economic Analysis show that less than 11 percent of all U.S. trade — imports and exports, goods and services — was with China in 2022.
Arnold Kling is realistic about industrial policy. Three slices:
Industrial policy is plagued by two forms of corruption that detract from achieving desired goals. Ideological corruption consists of prioritizing some quasi-religious belief. Rent-seeking corruption means prioritizing special interests.
Remember that whatever the theoretical rationale for government economic intervention, the political impetus is to subsidize demand and restrict supply. That is the combination of policies that rewards the interests of domestic producers, even if it detracts from achieving the stated objective of the policy.
Industrial policy is never made in a vacuum, fine-tuned to achieve some theoretical optimum. It contends with legacy policies, special interests, and irrational quasi-religious believers.
She is, however, an accomplished historian, and her book is most interesting, and needed, as a mellow, humane acceptance of an enduring truth from a forgotten novel (by L.P. Hartley): “The past is a foreign country: they do things differently there.” Faust has gone back to a foreign country — America when post-1945 conventions and complacencies began to crumble — and has returned with a needed gift for today’s nation: an example of mature assessment.
Ms. Descovich’s eureka moment came in 2014 when her son was in seventh grade. “I started seeing assignments coming home that were concerning,” she says. “He brought home an assignment that I have to this day. He got 100-plus on it, and the teacher had said, ‘Great job!’ When he handed it to me, he said, ‘I got an A.’ . . . It was a ‘wanted’ poster for Christopher Columbus, for ‘crimes against humanity.’”