Trump's Policies Will Have Trumpkins 'Mad as Hell'
While it's frequently said that "all economists" agree on the good of free trade, the on-the-ground reality is quite a bit different. University of Maryland professor Peter Morici is but one of many members of the profession who is spooked by free exchange among individuals. To wade through his op-eds is to read someone who thinks China's exports to the U.S. explain just about every American ill. Even though importing (from across the street and around the world) is the singular purpose of our production, to Morici the imports that logically signal muscular production are the source of our economic decline. Somehow we'd all be better off in Morici's eyes if we produced in return for very little.
The professor seemingly would have felt right at home in the old Soviet Union, but since the latter is happily in the rear-view mirror Morici will have to settle for a place in any Donald Trump administration. Figure the Donald will have to hire at least a few credentialed advisors, and Morici is one who believes as Trump does that abundant imports from China are a sign of Americans "losing." The citizens of Haiti, Zimbabwe and Honduras would love to "lose" in the way that we Americans do, but this would mean surging trade "deficits" for all three that would earn them the pity of Trump and Morici. Not a bad deal, to say the least.
In a recent column meant to extol the virtues of Trump's economic policies, Morici wrote that "Men supporting Donald Trump have reason to be mad as hell. The economy has turned against them..." The "economy" that has turned against men would be hurt by Morici's criticism, except that it's not a living, breathing blob capable of caring. Contrary to Morici's suggestion that the "economy" is focused on hurting men, the reality is that an economy is just a collection of individuals. Broken down to the individual, it's easy to see just how confused Morici is.
He writes that "Free trade agreements have been advertised as jobs creators but the facts simply belie that claim." Ok, but no serious economic thinker ever said free trade creates jobs. As the logic of free exchange dictates, we import so that we can kill off work that does the least to elevate our individual skills. The latter in mind, free trade achieves something much better from a jobs perspective: it maximizes the possibility that those of us working will get to pursue the kind of toil most in line with our talents. When we can "import" what we're not good at (something tells me the professor doesn't grow his own food), we can focus on the kind of productive labor that most animates our talents.
Breaking all of this down to the individual, can any reader say with a straight face that he or she is hurt when the most talented producers of clothes, cars and appliances line up to serve their needs? Is anyone hurt when competition in all three spaces from around the world leads to more of each at lower prices? To the individual, and that's all an economy is, free trade is unrelentingly brilliant simply because it means the world's talented are working feverishly to give us a bargain. That most of us would be unequal to the task of building cars, designing clothes and manufacturing televisions further reveals the genius of trade. We can leave all three to others while focusing on the work that we do best; work that will be exchanged for all that we don't have.
Thinking more about the individuals who comprise the U.S. and any other economy, when are we able to import the most? We're able to import the most when we're producing the most. That the U.S. is the biggest recipient of imports in the world is a very clear sign that contrary to Morici's regularly expressed misunderstandings, the U.S. is winning in a major way. Just as individuals can only consume insofar as they produce first, the fact that the U.S. economy rates the most global imports is the surest sign that Americans produce the most.
Morici presumes that imports have Americans "mad as hell," but he gets it backwards. Americans would be happy as hell if they were importing a great deal more, and they would be truly furious if they were importing less. Surging imports signal surging production, while a reduced inflow of goods signals much lighter production. That the U.S. is largely a free trading country (the average tariff on foreign goods into the U.S. is 1.4%) is the certain source of its promethean productivity that rates so much in the way of imports. If we weren't a free trading nation, Americans would be doing work less likely to match their talents on the way to reduced productivity, and shrinking imports.
Morici says imports "destroy" more jobs than they create, but the fact that the U.S. is the world's biggest importing nation signals how wrong he is. We once again couldn't import a great deal if we weren't working a great deal.
Morici thinks "foreign" imports hurt U.S. workers, but by that illogic his economic doppelganger in Trump shouldn't limit his rhetoric to placing tariffs on Chinese imports. By Morici's thinking, Trump should also rant about abolishing ATMs, cars, computers, and the internet. Figure all four have easily destroyed more jobs than foreign imports, but can anyone seriously say those advances have pushed Americans into breadlines? Can any reader confidently assert that the U.S. has been rendered worse off economically thanks to any of the four? It's not a serious argument to make, and it's similarly not serious to suggest that Americans have been hurt by foreigners energetically working to serve their needs. To import is once again why we work, and bounteous imports indicate that Americans are enormously productive workers.
Morici bemoans a "trade deficit" that "kills" millions of jobs, and in confidently proclaiming this he further reveals his confusion. To understand why, readers must think as individuals once again. As individuals our ability to "import" from across the street and around the world is directly related to our ability produce first. As individuals our trade balances, by definition.
Morici thinks it's bad that we allegedly import more than we export (thus the trade "deficit"), but would any individual ever complain if he or she were the recipient of copious market goods in return for very little production? Not very likely. Importantly, and glorious as it may sound, it's not happening in the U.S. economy. Americans "import" more goods and services than they export simply because American export of shares in the world's greatest companies doesn't count in the worthless measure of our trade balance. Trade always balances, it does so logically, but since one of the U.S.'s most popular exports is shares in its dynamic companies, Morici and Trump amazingly think we're losing. Still, the trade balances. Foreigners think the U.S. is one of the best places in the world to invest, we "export" lots of shares as a result, so the fact that foreigners love putting their money in the U.S. is the source of mythical "trade deficits."
Of course the above speaks to how plainly disoriented Morici is. Jobs are a function of investment. For a job or company to be created, someone must invest first. The U.S. has "trade deficits" simply because it's a magnet for global investment, yet Morici claims those same deficits that directly result from investment inflows into the U.S. kill U.S. jobs? He once again is analyzing things in completely backwards fashion.
Indeed, Morici's misplaced nostalgia has him yearning for the U.S. manufacturing jobs that he says were made obsolete by global trade. What Morici's saying in a veiled way is that exponentially poorer countries populated by workers who are much less productive than the average American worker are pursuing manufacturing work that Americans have left behind. That labor-intensive manufacturing has left the U.S. is a feature of the U.S. economy, not a bug. It is because it doesn't pay well. If the U.S. economy were still defined by workers in factories, the U.S. would be a very poor country bereft of investment and imports. A very poor U.S. would have a mythical "trade surplus."
More to the point, if Morici really wants to see voters "mad as hell," he should hope that we travel backwards to the manufacturing past he's nostalgic for, and that was never that great to begin with. If so, the average wage of the typical manufacturing worker will plummet as the investment that is the source of all wages migrates toward countries pursuing economic policies not promoted by deluded economists. The economy promoted by nostalgists like Morici and Trump is one of low wages and unrelenting drudgery, and yes, non-existent trade "deficits." Only rich countries have mythical "deficits" from trade simply because they're magnets for imports and investment. If Trump and Morici get their way the U.S. will "win" through declining investment, wages, and by extension, imports.
Back to reality, the sole purpose of production is once again the import of goods and services in return. No doubt the U.S. electorate is mad as hell, but its anger is rooted in a U.S. economy that isn't free enough, and that by extension isn't importing enough. We produce to get things, so the answer isn't barriers to the world's plenty as Trump and Morici want; rather it's more economic freedom stateside so that voracious Americans can import even more of what is produced around the world.