Trump And Trade

Mitt gives Mormons (whom I love) a bad name. I thought Mormons weren’t meant to bad-mouth others. Yet Mitt had nothing but bad things to say about Donald Trump, who is political tabula rasa, and has never passed a law in his life.

Neither has Trump ever caused the death of a single Iraqi kid. But the religiously devout Romney called him evil for defiling the precious memory of someone who had caused many thousands of such deaths: Bush II.

The meme about Mitt Romney is that had he attacked Barack Obama with the vim and vigor he reserved for Trump, he might have made it to president. (Likewise, if only Abe Foxman of the Anti-Defamation League went after Muslims who lob bombs at Jews with the passion he reserves for gentiles who raise their right hand in a pledge of support for Trump. Poor Abe is seeing Nazi faces in the clouds again.)

Romney also claimed Trump would “propose 35 percent tariff-like penalties,” and “would instigate a trade war that would raise prices for consumers, kill export jobs, and lead entrepreneurs and businesses to flee America.”

I don’t know that Trump favors protective tariffs, import quotas or export subsidies.

I do know that we don’t have free trade.

What goes for “free trade,” rather, is trade managed by powerful bureaucracies—national and international—central planners concerned with regulating, not freeing, trade; whose goal it is to harmonize labor, health, and environmental laws throughout the developed world. The undeveloped and developing worlds do as they please.

My understanding is that Trump simply wants to make these agreements and organs work for the American people.

I know, too, who did support “labeling China a currency manipulator,” so that he could “put in place, if necessary, tariffs where … they are taking unfair advantage of our manufacturers.”

Mitt Romney in 2012.

When it comes to the glories of an aggregate, negative balance of trade, libertarian post-graduate cleverness deserves to be questioned.

All libertarians (check) understand that voluntary exchanges are by definition advantageous to their participants. Costco, my hair stylist and the GTI dealer—all have products or skills I want. Within this voluntary, mutually beneficial relationship, I give up an item I value less, for something I value more: a fee for the desired product or service. My trading partners, whose valuations are in complementary opposition to mine, reciprocate in kind.

Ceteris paribus (all other things being equal), there’s nothing wrong with my running a trade deficit with Costco, my hair stylist or my GTI dealer, as I do—just as long as I pay for my purchases.

However, the data demonstrate that Americans, in general, are not paying for their purchases.

Americans, reports Fortune.com, actually have more debt relative to income earned than Greeks. “Indebted U.S. households carry an average credit card balance of $15,706, according to NerdWallet.”

Corporate America, say analysts at Goldman Sachs, is also heavily leveraged.

The Federal government is the definition of debt. The U.S. national debt is over $19 trillion without federal unfunded liabilities. Those exceed $127 trillion, by Forbes’ 2014 estimate. Total public debt as a percent of Gross Domestic Product, announced the Federal Reserve Bank of St. Louis, is 100.5 percent.

Our improvident government’s debts, liabilities and unfunded promises exceed the collective net worth of its wastrel citizens.

Given these historic trends, it seems silly to dismiss the yawning gap between U.S. exports and U.S. imports as an insignificant economic indicator.

Because of decades of credit-fueled, consumption-based living, the defining current characteristic of our economy is debt—micro and macro; public and private. Unless one is coming from the pro-debt Keynesian perspective, is this not an economically combustive combination?

Non-stop consumption—enabled by government monetary and regulatory policies—has coincided with a transition from a manufacturing-based economy to a service-based one; and from an export- to an import-oriented economy. For some reason, this reality has excited febrile libertarian imaginations.

I recall how animated Virginia Postrel, author of “The Future and Its Enemies,” became at the general shift in the American economy from knowledge-related to retail jobs, even faulting the Bureau of Labor Statistics for not recognizing the rise of spa-related personal services—manicure and massage therapy—for the powerhouse growth industries they are.

Historically, America’s annual trade deficit has been rising. Libertarians at CATO promise “[t]rade deficits do not cost jobs. Rising trade deficits,” they say, “correlate with falling unemployment rates. Far from being a drag on economic growth, the U.S. economy has actually grown faster in years in which the trade deficit has been rising than in years in which the deficit has shrunk.”

Contra the Keynesians who control the economy—and whose thinking some libertarians appear to be propping up intellectually, in this instance—real wealth is created not by printing paper money and galvanizing the globe’s governments to buy this government’s bonds, but by the production and consumption of products. An abundance of goods, not money income, is what makes for an increase in wealth. A natural shift must, therefore, take place in the U.S. from an economy founded on consumption and credit to one rooted in savings, investment and production.

The U.S. Bureau of Economic Analysis announced, March 4, that “the goods and services deficit was $45.7 billion in January, up $1.0 billion from $44.7 billion in December. Year-over-year, the average goods and services deficit increased $1.6 billion from the three months ending in January 2015.”

Moreover, from the fact that America purportedly ran trade surpluses during the Great Depression it does not follow that the nation’s current trade deficit is inconsequential as economic indices go. It could just as well mean that the economic fundamentals today are worse than they were during the Great Depression, since this country has never before been as deeply in hock as it currently is.

Far from comprising discrete parts, the economy is ineluctably interconnected. The trade deficit belongs to a nation enmeshed in debt.

Trump the business mogul is motivated by the sense that the nimbus of great power that surrounds the U.S. is dissipating. Fair enough. He must, at the same time, search closer to home for the causes of America’s economic anemia and for the burdens of doing business in America.

As for Mitt; he got off lightly. Trump’s linguistic infelicities are becoming legion—almost as bad as George W. Bush’s. At a loss for words to describe Romney, who respects the Republican voter not at all, Trump let him off with a soft, indecisive “sad.”

Let’s hope Trump’s incoherent, meandering pattern of speech doesn’t give way to soft talk.

©ILANA Mercer
WND, Quarterly Review, Praag.org,
The Libertarian Alliance &  Unz Review
March 11, 2016