This highlights at a serious problem in politics today and one that plagues both the American Left and the American Right. Elected officials view the Constitution (and indeed, the rule of law) as a set of roadblocks to be surmounted or navigated, not as a compilation of received wisdom from the past to inform principled policymaking. Nicholas Arnold and I explored this topic in 2023 in our essay, Mr. President, Tear Down This Fence. In it, we harken back to the notion of the Chesterton fence, which captures the idea that the rules and systems we have today are the product of reasoned debate in the past. Ignorance (on our part) of these debates does not invalidate the reason or wisdom for the rules and systems we have today.
Instead, the Senate bill substituted a new version. This time, it does not focus on the contempt power but instead targets temporary restraining orders and preliminary injunctions. These are rulings that demand that the government halt the enforcement or implementation of a policy immediately, pending the final outcome of the case, if the judge concludes that it is likely the plaintiffs will prevail against the government in the end.
Just imagine, for instance, that during Covid, courts could not stop executive orders closing down houses of worship unless millions of dollars were posted in bonds. Or an executive order confiscating guns. The basic idea of a temporary restraining order or preliminary injunction is to prevent the damage to the rights and well-being of citizens from the government carrying out an action or policy that is likely to be found illegal or unconstitutional.
The new Senate version turns that logic on its head, instead seeking to protect the government from any costs that might be incurred from citizens asserting their rights.
If a genie granted economists one wish, arguably the first thing we’d request is to strike the term “trade deficit” from our vocabulary (ok, fair, eliminating poverty may be a better choice, but capitalism is already doing a great job of that). The term has a negative connotation. Saying that our trade is in a “deficit” sounds scary, even if it’s just an arbitrary term for describing the net result of a series of win-win transactions between people in different countries in a global accounting ledger.
We needn’t discuss all the intricacies of how economists measure trade here (others have done an admirable job). Few topics elicit snores faster than a detailed dive into a nation’s balance of payments accounting. That said, a brief digression is warranted here to illustrate how the language we use to describe trade muddles the issue and biases us against trade deficits—even if they’re totally benign.
When it comes to how we document trade, there are effectively two sides to a nation’s balance of payments ledger. On one side is the “current account.” This account measures the market value of a nation’s exports and imports in a given year. We credit it whenever we export a good or service and debit it whenever we import it (henceforth, we’ll refer to goods and services as “stuff.” Forgive the technical term). The difference between the market value of a nation’s exports and imports tells us its “trade balance.” If the market value of a nation’s imports exceeds the value of its exports, it is said to run a “trade deficit.” If the value of its exports exceeds its imports, it runs a “trade surplus.”
Balancing it out on the other side of the accounting ledger is the “financial account.” This account essentially measures how much (financial) capital flows into a nation and how much flows out in a given year. We credit it whenever capital flows into our country and debit it whenever it flows out.
Suppose the U.S. starts from a position of “balanced trade” (where the dollar value of exports = dollar value of imports). Now imagine that Tanya McQuoid, a U.S. resident, imports a $1 million bottle of Domaine de la Romanée-Conti from the White Lotus vineyard in France by wiring $1 million worth of Benjamins across the pond to a French vintner. The moment she does this, America’s current account is debited by $1 million, thus pushing us into a $1 million trade deficit.
On the other side of the ledger, the moment the French vintner receives those dollars, he can either choose to hold them or invest them in dollar-denominated assets in the U.S. (Of course, this assumes that he doesn’t send them right back to buy U.S. exports; that would just reverse the entries our current account. But more on this later). Either way, America’s financial account is credited by $1 million, thus pushing it into a surplus. If calling that a “surplus” sounds odd, think of it this way: Americans import stuff from abroad by, in effect, exporting dollars to foreigners. In terms of financial capital, the U.S. “exported” one million more dollars to France than they exported to us.
Due to double-entry bookkeeping, these two entries—one in our current account and the other in our financial account—offset each other. The two sides of the balance of payments ledger must balance, for the same reason assets must equal liabilities plus equity on a firm’s balance sheet.
“Has Trade Policy Uncertainty Decreased a Lot? Yes, but only because it was so extremely high recently.” (HT Scott Lincicome)
John Phelan asks: “Is the EU a free trade zone?”
Washington Post columnist Kathleen Parker writes about Hannah Arendt. A slice:
When she came to the United States as a young woman, Arendt’s first impression was awe that “there really is a thing called freedom.” America, she said, wasn’t Christian, wasn’t White, but was “a country for everyone.” Her sense of security was to be short-lived under Sen. Joseph McCarthy’s hunt for communists, which created familiar dread in Arendt. Germany under Hitler’s influence similarly declared communists enemies of the state and began deporting them as the country descended further into hyperinflation and crisis.
Next, of course, came the Jews, who had migrated to Germany after World War I. It was relatively easy at that point for Hitler to demonize and later dehumanize migrant Jews, many of whom were destitute. The antisemitic narrative had changed dramatically by 1931, when Arendt said: “The most efficient fiction of Nazi propaganda was the story of a Jewish world conspiracy. The Nazis acted as though the world were dominated by the Jews and needed a counter conspiracy to defend itself.”
Chillingly, Arendt wrote in her 1951 book, “The Origins of Totalitarianism,” that “the ideal subject was not the convinced Nazi, but people for whom the distinction between fact and fiction no longer existed. A most cherished virtue is loyalty to the leader who, like a talisman, assures that ultimate victory of lie and fiction over truth and reality.”
If I get bored on the flight as I write this piece, I’ll probably turn my attention to one of the two books I brought along for the journey. But a person like Aristotle, for example, could not dream of such an object. The fact that there exist printers on a mass scale and a transportation system that allows for books filled with standardized typographies to be distributed across the world is amazing.
Once I leave the plane, I’ll immediately text my girlfriend that I’ve arrived safely, something that was inconceivable a few decades ago. We no longer need to write potentially outdated letters that may take months to arrive or make prohibitively expensive calls to talk to our loved ones. The same cellphone I use in Argentina allows me to be in touch with anyone even if I’m in a different continent.
