Here’s a letter to a long-time correspondent.
Mr. Estes:
Thanks for your email in response to my blog post this morning on tariffs.
You’re skeptical of my claim that commerce among people with different national residences differs in no economically relevant way from commerce among people with different eye colors. You write that you “cannot imagine what the group ‘hazel-eyed people’ might be thought to do to hurt blue and brown-eyed people economically.”
Your point is fair, so let me use a different example – namely, trade among Americans of different ages. As a group, Americans between the ages of 35 and 64 are generally net savers, while younger Americans save much less and retired Americans typically draw more heavily on previously accumulated savings. Yet members of each age group freely trade with members of all other age groups. Indeed, insofar as younger and older Americans spend more than they currently earn, financing the difference with savings accumulated by middle-aged Americans, the former can be said to run “trade deficits” with the latter, who run corresponding “trade surpluses.”
But obviously, these differences in saving and spending patterns are not evidence that one age group economically exploits another. Yet the same logic that prompts Pres. Trump and other protectionists to impose tariffs on imports because America consistently runs international trade deficits should – were this logic economically sound – prompt these protectionists to endorse protective tariffs on goods and services offered for sale by middle-aged Americans to younger and older Americans.
Of course, not even Mr. Trump would favor such tariffs. But he could not consistently defend protective tariffs on trade between Americans and foreigners while rejecting similar tariffs on trade between Americans of different ages.
Sincerely,
Don
