Oftentimes, when pundits or politicians complain about the US trade deficit, they have in mind only trade in goods or merchandise – that is, only trade in tangible items such as soybeans, steel, tires, and textiles. Trade in services is ignored. Indeed, the US Census Bureau regularly reports on the “goods deficit” that America routinely runs each month in its trade with the rest of the world. Whenever, as is almost always the case, we Americans in some month import more goods than we export, this outcome is described as a “negative balance of trade in goods.” Negative. Sounds bad.
But it’s neither bad nor good. It’s meaningless.
Well over three-quarters of US GDP is services, everything from Jack the lawn-care guy mowing your lawn to Jill the neurosurgeon removing your neighbor’s brain tumor. For many decades now, most of us Americans have had comparative advantages at producing outputs classified as “services.” And because to have a comparative advantage is to have many comparative disadvantages, most of us Americans have long had a comparative disadvantage at producing goods. It’s thus no surprise that America is today the world’s largest exporter of services.
It should then also be no surprise that, while we Americans import more goods than we export, we export more services than we import. America regularly runs a so-called “positive balance of trade in services,” with many of these service exports paying for the goods that we import.
So what?
So this: Fretting about the “trade deficit in goods” run by Americans makes no more sense than fretting about the “trade deficit in goods” run by Taylor Swift. Ms. Swift, after all, is like most Americans: she specializes in producing and selling services, and uses some of this service-sector income to buy goods. And just as Ms. Swift would make herself immensely poorer were she to change her work habits in order for her to sell more goods than she buys, our government would make us Americans immensely poorer were it to arrange for us to export more goods than we import.
Because services have economic value no less than do goods, it’s ludicrous to isolate any one of these forms of valued outputs – namely, goods – and then to measure and report a country’s purchases and sales of that one form of output.
Such measuring and reporting is just as pointless as would be the measuring and reporting of exports and imports according to color. The US government could, for example, record the aggregate value of all the maize, pencils, lemons, and other yellow things that we export, and record also the aggregate value of all the sunflowers, honey, butter, and other yellow things that we import, then compare the value of our yellow exports to our yellow imports and issue every month a report on America’s balance of yellow-things trade. This exercise could be carried out for all of the other colors of exports and imports. America would be found to have a “negative trade balance” in some colors and a “positive trade balance” in other colors, but what would be the point of such an exercise (except, perhaps, to better arm American corn farmers to lobby for more subsidies)? Common sense correctly tells us that exports’ and imports’ colors are economically meaningless. It follows, obviously, that a report that America last month ran a “negative balance of trade in yellow things” would be no cause for concern (and no credible justification for more subsidies to corn farmers), just as a report that America last month ran a “positive balance of trade in blue things” would be no cause for celebration. Both reports would be economically meaningless.
The classification of outputs bought and sold on international markets according to whether these outputs are tangible or intangible is no more economically justified than would be the classification of these outputs according to their colors. Yet unlike the latter classification, the former classification is routinely performed and written about – and pontificated on – as if it’s laden with economic meaning. This fact alone is powerful evidence that officialdom’s understanding of international trade is seriously defective. Anyone who finds meaning in a “balance of trade in goods” is someone whose thinking about the economics of trade is so incompetent that anything he or she says about trade deserves no serious attention.
Matters improve only somewhat when what is meant by the so-called “trade deficit” is an excess of imports of goods and services over exports of goods and services. Measuring the combined values of goods and services traded internationally at least avoids the pitfall of supposing that the production and consumption of some kinds of economic outputs (for example, tangible things) is inherently better or worse than is the production and consumption of some other kinds of economic outputs (for example, intangible things). But even when the value of traded goods is combined with the value of traded services, any resulting finding of a “trade deficit” or “trade surplus” is highly misleading.
If this month we Americans import more goods and services than we export – that is, if we run a so-called “trade deficit” – one conclusion commonly drawn by people who are poorly informed about international commerce is that the difference between the value of what we export and the value of what we import must be “financed” either by foreigners extending credit to Americans or by Americans disgorging assets to foreigners. If this common conclusion were correct, then US trade deficits would indeed reduce the net worth of Americans as a group. With every month of trade deficits we Americans would either go further into debt to non-Americans or the value of the assets that we own would fall. Either way, our net worth would decline.
Fortunately, this common conclusion is spectacularly incorrect. America started in 1976 what will be at the end of 2023 an uninterrupted 48-year run of annual trade deficits. 1976 is the year that I graduated from high school, and 2023 is the year that I reach the traditional retirement age of 65. So for my entire, long adult life America has run trade deficits. If US trade deficits really do reduce Americans’ net worth, we would by now be a nation of paupers. Yet we aren’t. Not remotely.
… is from page 351 of Liberty Fund’s 2017 expanded English-language edition, brilliantly edited by David Hart, of Frédéric Bastiat’s indispensable work Economic Sophisms and “What Is Seen and What Is Not Seen”; specifically, it’s from Bastiat’s previously unpublished 1847 essay “A Little Manual for Consumers; In Other Words, for Everyone” (“Le Petit manuel du consommateur ou de tout le monde”) (original emphasis):
Consume – Consumer – Consumption; these are ugly words that represent people as so many barflies, constantly with a coffee cup or a wine glass in front of them.
But political economy is obliged to use them. (I am referring to the three words, not the wine glass.) It does not dare to invent others, as it has found these ready-made.
Let us nevertheless set out what they mean. The aim of work, both cerebral and manual, is to satisfy one of our needs or desires. There are therefore two terms in economic evolution: effort and reward. Reward is the product of effort. It takes effort to produce; enjoying the reward is to consume.
DBx: Not a week passes that I don’t encounter at least one person criticizing market-oriented economists (or libertarians, or “market fundamentalists,” or “neoliberals”) for naively supposing that human beings are motivated exclusively, or at least overwhelmingly, by base material desires. “Oh, you free-market economists stupidly suppose that real people are gluttonous consumption machines. You don’t understand that real people value, in addition to goods and services for consumption, many ‘non-economic’ things and experiences, such as family, community, and a sense of purpose.”
Ugh. This accusation is simply incorrect.
Those who oppose free markets must discredit arguments offered in support of free markets. And one convenient and cheap source of discredit is to accuse supporters of free markets of believing that the typical person is or ought to be narrowly materialistic, or even money-grubbing. Because every reasonable person understands that only sociopaths are single-mindedly greedy – that only Hollywood cartoon villains care exclusively about maximizing the quantities of consumer goods or currencies in their grasps – if proponents of free markets are portrayed as believing either that the typical person is a sociopath or should be one, this portrayal enables opponents of free markets easily to dismiss the case for free markets, being – as that case is thought to be – rooted in lunacy. No need to engage any further or more deeply the case for free markets; just behold the “market fundamentalists'” laughably unrealistic belief that real-world people care only about stuffing their houses – preferably McMansions – with as many frivolous consumption goods as possible.
So frustrating.
The word “consumption” (and its variants), as used by economists, means nothing more than “satisfaction of ends.” Every human action is aimed at using means to achieve some end or ends. And “satisfaction of ends” is what – and all that – economists mean by “consumption.” The economic way of thinking is as applicable to understanding the pursuit and provision of job security and unchanging communities as it is to the pursuit and provision of patio furniture and Tahitian vacations.
But by accusing market-oriented economists of having something to say only about the pursuit and provision of the likes of patio furniture and Tahitian vacations, opponents of free markets attempt to shield their proposed interventions from the criticisms of economists. Yet because job security and unchanging communities are indeed valued but also are, no less than are patio furniture and Tahitian vacations, scarce, economics speaks important truths about the pursuit and provision of the likes of job security and unchanging communities.
And among the truths spoken is this: If government forces Smith to pay for all or even part of Jones’s increased job security or community stability, government forces Smith to forego some ends that Smith values no less – and likely more – than Jones values his increased job security or community stability. I write “and likely more” because if Jones really valued, say, his increased job security by more than Smith values what she is forced to sacrifice to enable Jones to enjoy increased job security, Jones would himself voluntarily pay the cost of this increased job security (say, by offering to work at a lower wage). The fact that government forces Smith to give up pursuit of some of her ends in order to enable Jones to better pursue some of his ends – that is, the fact that government arranges for Jones to free-ride on Smith – at best gives us no reason to believe that the additional benefits enjoyed by Jones are as high as are the additional burdens suffered by Smith.
Market-oriented economists reasonably ask: What’s the justification for enabling Jones to achieve more of his ends at the expense of forcing Smith to achieve fewer of her ends? Why is Jones more important than Smith? The ethical obligation to answer these questions cannot legitimately be escaped by the cheap tactic of proclaiming that the economic way of thinking that generates these questions is inapplicable to Jones’s desires.
George Will explains the reality and value of the Major Questions Doctrine. Two slices:
Biden claimed to find authority for [student-loan] forgiveness in a post-9/11 law passed to help members of the military by authorizing the executive branch to “waive or modify” terms of student financial assistance “in connection with a war or other military operation or national emergency.” As Chief Justice John G. Roberts Jr. noted, calling loan forgiveness for 43 million Americans “modifying” the terms of assistance is akin to saying the French Revolution “modified” the French nobility.
Roberts relied on the law’s text more than the MQD. But during February’s oral arguments about loan forgiveness, Roberts said if so much money is to be spent, affecting the obligations of so many Americans, “that’s something for Congress to act on.”
(Congress did act — by rejecting forgiveness. Between 2020 and 2022, Congress passed $5 trillion in pandemic relief bills, one of which suspended student loan payments, but none authorized forgiveness. So, Congress had spoken clearly by not delegating forgiveness authority.)
…..
The constitutional structure is, she [Justice Amy Coney Barrett] noted, “part of the legal context framing any delegation.” The document vests “all” legislative power in Congress, so “a reasonable interpreter would expect it to make the big-time policy calls itself, rather than pawning them off to another branch.”
Progressivism encourages pawning off. But because, as Barrett wrote, “the Constitution gives Congress the reins,” a reasonable textualist interpreting statutes should generally be skeptical of executive claims to extravagant statutory powers.
The MQD, as explained by Barrett, has emerged organically from judicial reasoning about executive overreaching that is encouraged by Congress underperforming its duty to be clear. MQD’s excellent result is restored constitutional equilibrium.
June 30 marked the third anniversary of Hong Kong’s notorious national-security law, but apparently the city’s government thinks that jailing publisher Jimmy Laiand other locals for years isn’t enough. On Monday Hong Kong issued arrest warrants and offered a bounty of HK$1 million ($127,636) each for eight pro-democracy advocates now living abroad.
The eight are former lawmakers, commentators and union representatives: Nathan Law Kwun-chung, Elmer Yuen Gong-yi, Dennis Kwok Wing-hang, Kevin Yam Kin-fung, Anna Kwok Fung-yee, Mung Siu-tat, Finn Lau Cho-dik, and Ted Hui Chi-fung. The Hong Kong Security Bureau notes that because “the National Security Law has extraterritorial effect, the Police have the responsibility to pursue the liability of those who have allegedly committed offences under the National Security Law outside Hong Kong.”
The eight now live in freedom in the likes of the U.S., Britain and Australia, and the government’s move confirms they were right to flee Hong Kong when they did. Hong Kong knows these countries won’t extradite the dissidents. But it’s a warning for people still in Hong Kong that they can be arrested even for communicating with people abroad.
It’s also a reminder that China recognizes no international boundaries to its police state. In April two men were charged for operating an illegal secret Chinese police station in Manhattan. The station is one of dozens around the world used to monitor and harass Chinese abroad. The eight who are targeted will have to be careful where they travel lest some government seeking to win points in Beijing snatch them and send them to the dungeons of Hong Kong.
The Federal Trade Commission is trying to make it harder for companies to merge by burying them in paperwork. The FTC’s proposed overhaul of a critical part of the U.S. merger review process would increase the average time to prepare a merger filing from 37 hours to 144. According to the agency’s calculations, that’s roughly $350 million in added costs for an estimated 7,100 filings a year, which would be a boon for lawyers but a burden for businesses.
The one-size-fits-all proposal to add dozens of hours of paperwork per deal—regardless of competitive concerns—is an overreach by the FTC and the Justice Department’s antitrust division that will disproportionately chill investments at the lower end of the reporting threshold. While some of the changes are reasonable adjustments to address evolving business and transaction structures, subjecting thousands of competitively neutral transactions to expanded reporting hurdles is hard to justify when only a slim minority of deals raise antitrust concerns.
James Harrigan understandably admires the Declaration of Independence.
David Henderson reacts to Barton Swaim’s misunderstanding of libertarianism. A slice:
Swaim also writes:
A polity, if it’s to function and endure, must offer its members a reason to remain attached, in their loyalties and affections, to the collective. That requires some engagement with ultimate questions—questions about the good life, morality, religious meaning, human purpose and so on. Modern libertarians are allergic to all such topics. Almost the only figures who mention such things in “The Individualists”—Adam Smith, William Lloyd Garrison—lived and died in the 18th or 19th century.
It’s simply false that libertarians have not contended with these issues. We are not allergic to these topics; we often discuss them. But one of the virtues of libertarianism is that we are tolerant of people who come to different views on these topics. Many libertarians are Christians, Jews, or Muslims. A minority of libertarians are atheist or agnostic. But no libertarian I know of–and I know many hundreds–advocates a state religion. That’s one of those many “important political questions” that we don’t argue about. Boaz has a nice treatment of this issue.
Wesley J. Smith criticizes Fauci. A slice:
For their temerity, [Jay] Bhattacharya and his Great Barrington colleagues were slandered in an email to Fauci by NIH head Francis Collins as “fringe” doctors — which was obviously false as Bhattacharya alone had published more than 100 peer-reviewed professional articles. Worse, Collins urged Fauci to actively discredit the declaration with a “devastating takedown” rather than debate or discuss it, which would have been the proper scientific approach.
Fauci appears to have eagerly jumped to that task. He responded to Collins with a link to a story in Wired, in which science editor Matt Reynolds called the controversy over the proper response to Covid “a manufactured scientific debate.” At about the same time, a column in the Washington Post described the three authors as “mavericks.” The New York Times reported that Fauci castigated the GBD “as unscientific, dangerous, and ‘total nonsense,’” the latter charge he repeated on ABC News. More, according to a lawsuit filed by Kulldorff, Bhattacharya, and others against the government and public-health leaders, Fauci “coordinated directly with Facebook and/or other social-media firms to suppress disfavored speakers and content of speech on social media.”
The GBD authors soon found themselves the subject of media scorn, accused of being indifferent to Covid deaths, their reputations badly tarnished in the most public ways. This despite the authors’ motives clearly being “as noble” as Kramer’s during AIDS. (To hear Bhattacharya’s first-person description of that emotionally searing experience, hit this link to our interview on my Humanize podcast.)
The @nytimes has its Missouri v. Biden story exactly backwards. The Biden administration used its censorship apparatus to protect it from outside criticism of the covid misinformation it spread. See my March 2023 congressional testimony for details.
… is from page 117 of University of Connecticut economist Richard Langlois’s monumental 2023 study, The Corporation and the Twentieth Century (footnote deleted):
The Priority Division [of the U.S. government’s War Industries Board during WWI] immediately slammed into the hard reality that allocating resources through a priority system is impossible, even in wartime when everything can be measured in principle against a single unified objective. The division could never possess the kind of detailed knowledge necessary to understand the first-order implications let alone the higher-order ramifications of its decisions.
DBx: No economy of more than a few dozen persons can hope to perform adequately if individuals on the spot, each with his or her own unique vantage point about resource availabilities and opportunities (and also, of course, his or her own preferences and goals), is not allowed wide scope to act in whatever peaceful ways he or she sees fit in response to his or her unique knowledge. The dispersed bits of knowledge that are acted upon, as Hayek emphasized, are not given and cannot be given to any single mind or computer – so all talk of A.I. being able to replace markets and market prices is deeply mistaken.
Full-on socialists, democratic socialists, and advocates of industrial policy refuse to accept this reality. All such opponents of the market order think of resource allocation as a relatively simple process. None of these people begin to appreciate just how unfathomably complex is the array of economic arrangements and processes that they propose to re-engineer to better suit their personal preferences, or – with no small measure of presumptuousness – to better suit what they assume are the personal preferences of millions of strangers.
Enter George Washington. Upon military victory in 1783, the Continental Army’s supreme commander resigned. Even if he held vast emergency powers to fight a war against the world’s leading superpower, he relinquished all control and authority, leaving the Continental Congress in charge of the newly independent country. He refused any political power, despite support for a Washington-led monarchy and some army officials’ calls to violently take backpay.
Megan McArdle is optimistic about the resilience of American society. A slice:
Watch Americans dealing with one another day to day and you will mostly see them going out of their way to be nice. There are far more random acts of kindness in this country than there are drive-by shootings, and far more people acting with honesty and integrity, even when no one’s looking, than there are con men and thieves. We focus on the latter precisely because they are rare.
Which is why, for all the bad, America is better than it thinks itself. And I dare to believe that, in the future, it will be better still.
Deirdre McCloskey talks with Chris Kaufman about the bourgeois era.
Wall Street Journal columnist Jason Riley asks for evidence that Clarence Thomas benefitted from affirmative action. Two slices:
The political left’s reaction to Justice Clarence Thomas’s concurrence in last week’s Supreme Court ruling that bars the use of racial preferences in college admissions is more evidence that affirmative action stigmatizes black achievement. Justice Thomas has been labeled a hypocrite for opposing racial preferences because he supposedly benefited from them as a college student, yet no one has produced any evidence that race played a role in his admission to Holy Cross College or Yale Law School.
According to press accounts, Justice Thomas was recruited to Holy Cross by a dean, Father John Brooks, who wanted to increase the number of black students on campus, but the justice has long denied this claim. He started college at Immaculate Conception, a seminary in Missouri, but left after a year and returned home to Savannah, Ga. In his memoir, he says he applied to Holy Cross at the urging of a nun who had taught him in high school. “I ranked near the top of my class at Immaculate Conception, so Holy Cross had quickly accepted my application,” he writes. “The only problem was money, but the director of financial aid told me that something could be worked out.”
…..
Nor is there any evidence that Justice Thomas was admitted to Yale Law School under its affirmative-action program rather than through the regular admissions process. He graduated from Holy Cross ninth in his class (of more than 500 students). According to the New York Times, eight Holy Cross graduates were admitted to Yale Law between 1968 and 1978, the decade that included Justice Thomas’s law school career. Why assume that he got in only because of his race? Why question the justice’s credentials but not Bill Clinton’s or Hillary Rodham’s, two of his fellow Yale Law students? The reason is affirmative action, which has made people suspicious of black academic and professional success.
Charles Cooke writes wisely about Justice Clarence Thomas and affirmative action.
Hans Bader is rightly unimpressed by the dissenters in Students for Fair Admissions v. Harvard.
Arnold Kling reviews Jean Twenge’s Generations.
Each with a letter-to-the-editor in the Wall Street Journal, David Boaz and Christopher Hanford ably defend libertarianism from Barton Swaim’s assertion that it is “studiously amoral.” Here are those letters:
In his review of “The Individualists” by Matt Zwolinski and John Tomasi (Bookshelf, June 29), Barton Swaim refers to the “studiously amoral philosophy of libertarianism.” A popular summary of libertarianism, “don’t hit other people, don’t take their stuff and keep your promises,” is just the sort of basic morality that allows human beings to live together.
David Boaz
Senior Fellow, Cato Institute
WashingtonThe core tenet of libertarianism is that a person is free to do as he chooses until he inhibits the right of others to do the same. That principle will never need “an obituary.” Far from avoiding life’s biggest questions, it can be a guide for answering them.
Christopher Hanford
Benicia, Calif.
… is from page 44 of the 2022 paperback edition of C. Bradley Thompson’s superb 2019 book, America’s Revolutionary Mind (original emphasis):
Political self-government depends on moral self-government, which in turn depends on an individual’s ability and willingness to follow the “standard of reason.”
DBx: Without most individuals having the capacity for moral self-government, decent civilization is impossible. Decent civilization can, under such circumstances, be achieved neither by freedom nor by any species of collectivism. But whereas collectivism can destroy decent civilization that arose through freedom among morally self-governed individuals, collectivism can never – no matter how morally self-governed are most of the population – create or sustain decent civilization.
…..
To all of my fellow Americans, Happy Fourth of July!
… is from pages 55-56 of Scott Lincicome’s superb Winter 2021 Cato Journal paper, “U.S. Trade Policy toward China: Learning the Right Lessons” (references omitted):
[T]he U.S. government has missed several opportunities to check China’s actions and support domestic labor markets since Beijing undertook the economic liberalization and legal commitments required of WTO accession. Most of those actions – for example on industrial subsidies and intellectual property – are covered by WTO rules and can be litigated through dispute settlement. Contrary to popular wisdom, moreover, such litigation has proven effective. For example, the United States was undefeated at the WTO when challenging Chinese trade practices between 2002 and 2018 and has won several more cases since that time. And when China loses WTO disputes, it tends to comply with the decisions. Chinese compliance is not perfect (nor is any other WTO member’s), but it is arguably better than that of the United States, which has famously shirked WTO rulings on subsidies, antidumping rules, and internet gambling.
DBx: At the 2019 FreedomFest in Las Vegas I debated Steve Moore on trade. (I defended free trade against Trump’s protectionism.) When there arose the issue of Chinese theft of Americans’ intellectual property, I criticized the Trump administration for immediately using such theft (only some of which is actual theft, by the way, as opposed to in-kind taxation) as an excuse to impose protectionist trade barriers. It would be better, I argued, first to take such disputes over intellectual property to the WTO. Why immediately retaliate against the Chinese in ways that impose unambiguous costs on innocent Americans? Steve accused me of being naive about the WTO, alleging that that organization is too ineffective to take seriously. Despite my mentioning evidence of the WTO’s effectiveness, including in disputes involving China, the audience cheered Steve as if my position was too pollyannish to take seriously.
Boston Globe columnist Jeff Jacoby reminds us of what Frederick Douglass “really said in his great Independence Day speech,” delivered on July 5th, 1852. Here’s Jacoby’s conclusion:
He spoke on the Fifth of July, but he nevertheless exalted the date atop the Declaration of Independence. “The Fourth of July is the first great fact in your nation’s history — the very ring-bolt in the chain of your yet undeveloped destiny,” Douglass told his listeners. “Cling to this day — cling to it, and to its principles, with the grasp of a storm-tossed mariner to a spar at midnight.” The great abolitionist rejected the counsels of despair and contempt. The American founding, he knew, was as relevant as ever, holding out the promise of greater, better days to come. It was so in 1852. It remains so today.
GMU Econ alum Byron Carson explains the happy economic reality of substitutability.
My GMU Econ colleague Dan Klein writes in Reason about Adam Smith and the American Revolution.
Richard Fulmer asks if AI can fact check AI. A slice:
The claim that women are paid 75 percent of what men earn for doing the same jobs requires that millions of employers ignore their own self-interest. Why would they leave so much money on the table? Why not hire an entirely female workforce, pay them (say) 80 cents on the dollar, and wipe out the competition?
Does the alleged fact require that countless people are colluding? Consider, for example, the claim that inflation is caused by corporate greed. Really? Hundreds of thousands of firms simultaneously raise their prices and not one of them sees an opportunity to grab market share by underselling the competition?
Here from my GMU Econ colleague Bryan Caplan are some one-paragraph book reviews.
From last October, Andrew Ferguson reviews Rolling Stone founder Jann Wenner’s autobiography. (HT Craig Newmark) Two slices:
Over the last 50 years, roughly the lifespan of Rolling Stone, the defection of the white (and now, increasingly, the Hispanic) working class from the Democratic Party left limousine liberals a lot of room for redecoration. They turned the party into a kind of performance space, a stage for striking moral poses and issuing political mandates that always seem to require more from their fellow citizens than from themselves. The well-to-do activists of the Democratic Party, lucky them, get to have their Ben and Jerry’s Groovy Tie Dye Ice Cream Cake and eat it too. The meat-and-potatoes liberalism that shaped the party of Wenner’s youth seems a distant dream. It’s hard to imagine Eleanor Roosevelt posing in a backless number at the Met Gala or George Meany canvassing Martha’s Vineyard for John Kerry’s presidential campaign, as Wenner and his pal Larry David did in 2004.
…..
The same obliviousness holds true in his political excursions. Manmade climate change is evidently unaffected by the long flights on his personal jet. He is, who would’ve guessed, a passionate advocate of gun control and the confiscation of private firearms; one chapter is even titled “Fuck the NRA.” But—boy!—was he ever glad his guide on a cross country motorcycle trip was packing heat to protect him from the rednecks that infest the land between the coasts. (In fairness, I should add that the guide didn’t have to shoot any of them.) He bravely condemned the “greed” unleashed by Ronald Reagan and other Republicans. Yet even as he tends an ever rising pile of money, fighting for every inch of market advantage, squeezing the best financing rates he can from Wall Street, and slashing payroll to juice profits, he never succumbs to greed himself. Greed is one of those terrible character flaws that only afflicts other people. Most of them, thank God, do not have summer compounds in Montauk.
Kim Potter tweets: (HT Jay Bhattacharya)
My mom died bc of lockdowns.. no Covid in their area at the time. She had early onset Alzheimer’s. The gov closed facilities to family. My dad went daily to feed & walk w her. In his absence, she was strapped in a wheelchair & starved. Mar 12 – 135 lbs to Jun 20 – 85 lbs.
… is from pages 259-260 of the 1983 collection of some of the writings of the late G. Warren Nutter, entitled Political Economy and Freedom; specifically, it’s from Nutter’s previously unpublished 1973 essay “Moralism, Morality, and Trade”:
No policy can be constructed on the all-embracing principle that everything depends on everything else. Those cause-and-effect relations that are immediate and direct must be distinguished from those that are remote, indirect, and generally unpredictable. In that sense, a [national] security-oriented policy should be conceived as one designed to cope with clear and present external forces directly threatening preservation of our form of government and way of life.
To go beyond this specific purpose is to take upon ourselves a moral duty beyond our borders, whether to right wrongs as we perceive them, to spread freedom and democracy as we conceive them, or to liberate others from oppressions forces as we see them. It is to presume that we have a right or obligation to intervene directly in the internal affairs of other nations, provided only that our cause is just. If that presumption were warranted, other nations would have a similar right or obligation, and the only point of contention would be justness of cause, an issue not easily settled by consensus.
DBx: Pictured above is G. Warren Nutter (1923-1979).
Here’s a letter to the Wall Street Journal:
Editor:
Arguing that America’s national security requires a vibrant merchant-marine fleet, Seth Cropsey observes that such vessels in the U.S. “are in short supply, as are the mariners that will command and crew them” (Letters, July 3rd).
Nothing has contributed as much to the decline of America’s merchant-marine fleet than has the 1920 Jones Act, which requires that each vessel carrying goods by water between U.S. ports be 75 percent owned by Americans, 75 percent crewed by Americans, and built (or rebuilt) – and registered – in the U.S. The resulting higher costs of transporting goods within the U.S. by water has had predictable negative effects, as explained by Colin Grabow, Inu Manak, and Dan Ikenson*:
Among oceangoing ships of at least 1,000 gross tons that transport cargo and meet Jones Act requirements, their numbers have declined from 193 to 99 since 2000, and only 78 of those 99 can be deemed militarily useful….
One of the main causes of that decline is the onerous domestic‐build requirement of the Jones Act, which prohibits U.S. shippers from operating vessels constructed abroad. American‐built coastal and feeder ships cost between $190 and $250 million, whereas the cost to build a similar vessel in a foreign shipyard is about $30 million. Accordingly, U.S. shippers buy fewer ships, U.S. shipyards build fewer ships, and merchant mariners have fewer employment opportunities to serve as crew on those nonexistent ships.
Meanwhile, facing exorbitant replacement costs, ship owners are compelled to squeeze as much life as possible out of their existing vessels. That means the Jones Act fleet is not only shrinking, but rapidly aging. The typical economically useful life of a ship is 20 years. Yet three of every four U.S. container ships are more than 20 years old and 65 percent are more than 30 years old. Excluding tankers, the ships in the Jones Act fleet currently average 30 years old, fully 11 years older than the average age of a ship in the world merchant fleet of other developed countries.
Politicians genuinely interested in using trade policy to strengthen America’s national defense can start by repealing the protectionist Jones Act.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030* Colin Grabow, Inu Manak, and Daniel J. Ikenson, “The Jones Act: A Burden America Can No Longer Bear” Policy Analysis, Cato Institute, June 18, 2018.
