From Robert Graboyes’s excellent Bastiat’s Window, Trade Winds 2025-Seriously and Literally:
As seen in the accounting equations in the previous post (“Real-World Trade-Deficit Math-Magic,”), you can’t get rid of a trade deficit without also losing foreign investments in America. This insight was undiscovered in the age of mercantilism and unappreciated in the age of “anti-globalism.”
“Globalism” (a.k.a., free trade) is to those on the political right what “trickle-down economics” (a.k.a., free markets) is to those on the political left. Both are vacuous pejoratives that translate loosely into English as, “Somewhere on Earth, buyers and sellers are engaging in voluntary trade and minding their own business AND WE HAVE TO STOP THEM.”
“China says, ‘Our government will use sledgehammers to break the hands of 90% of China’s people to discourage them from buying American gloves.’ America responds with, ‘Oh YEAH??? Then OUR government will use sledgehammers to break the feet of 90% of AMERICANS to discourage them from buying Chinese shoes.’ China’s tariffs are self-destructive, and America’s retaliatory tariffs are equally self-destructive.”
By the way, this map also sheds light on the Great Depression. As I explained recently, the Roaring Twenties likely resulted from the desire of Warren Harding and Calvin Coolidge to keep their hands off of businesses to avoid destabilizing them; in contrast, Herbert Hoover and Franklin Roosevelt were both dealmaking busybodies who constantly interfered in markets, changing the rules of the game over and over until business crawled into a shell for more than a decade.
Several readers said I should take Trump seriously, but not literally—which was journalist Selena Zito’s famous take on candidate Trump in 2016. Zito’s perception was razor-sharp, but my responses were threefold:
- “Seriously, but not literally” had its charms for an insurgent candidate but is untenable for a sitting president who has the nuclear codes and the power to vastly alter the conditions of world trade on whim—nation by nation, product by product, day by day.
- World markets clearly take him literally, even if his supporters don’t.
- Trump supporters who traffic today in this idea that the president does not mean what he says do no service to their world, country, president, party, or selves.