International trade is a two-way street. We have imports and exports. We must sell exports in order to buy imports. When we cannot, we have trade deficits.
Those nations that have high tariffs and only export goods are practicing mercantilism, getting rich on our trade deficits. This is what the 18th-century French economist Jean-Baptiste Say realized. Say’s Law simply states, in effect, that before we can buy the family groceries, we must first bring home a paycheck.
The Keynesian and other economists who gave us the Great Depression under Herbert Hoover (made much worse by Franklin D. Roosevelt), “stagflation” under Jimmy Carter and the worst recovery in 50 years under Barack Obama are asserting an expertise and prestige they do not have. This was the warning that Friedrich Hayek gave to all economists in his 1974 Nobel Prize acceptance speech, titled “The Pretense of Knowledge.”
Those mainstream economists who oppose President Trump are asserting an expertise they do not have and living in the imaginary world of their economic paradigms where the various elements of an economy can be easily moved around. In the real world, however, we can move money with the speed of the internet, but we cannot easily make a 50-year-old steelworker into an information technology specialist. He will only end up on welfare, in dependency and despair, at great cost to society. To those nations practicing mercantilism, the president is saying, “Lower your taxes so that we can prosper by being able to both buy and sell and a 50-year-old steelworker can continue to support his family.”
Donald Trump, as a businessman, knows that the best deal is when both sides gain and prosper.
Olof L. Anderson
Thomaston
Send questions/comments to the editors.
