My emeritus Nobel-laureate colleague, Vernon Smith, sent the following note to me in response to this post of mine on Trump’s misunderstanding of trade. I share this note in full with Vernon’s kind permission.
Don:
Good job of explaining Trump’s ignorance on tariffs and trade. He really does not understand trade and the sharing of gains from trade.
The theorem that markets Limit the extent of specialization, which creates wealth, implies that any interference with markets, such as tariffs, reduces wealth creation.
Vernon
