I’ve been watching the trade war talk heat up as our president pursues something mystically called “fair” trade. I’m all in favor of free and fair trade. Furthermore, I agree with the president that trade deals should be “reciprocal”. But, in a sense, on trade, Trump gets it and doesn’t get it.
Certainly, the broad general benefits of our free trade agreements are real. Yet, those very real gains aren’t evenly distributed. The negative repercussions seem to be concentrated in the industrial middle part of the country. Even though, to be honest, the problem had been building long before NAFTA and WTO. It’s the coastal urban financial centers, though, who have garnered most of the dough. That’s the “gets it” part, if we can construe his comments to be some roundabout recognition of free trade’s spotty effects.
As for the “doesn’t get it” part, he talks about $500 billion trade deficits as if the money is lost from our country. Really? No, it isn’t lost. For instance, China gets dollars for its exports to us. What are they going to do with the dollars? They can’t use them as currency in China or any other foreign country for that matter. They have to either spend them in the US or park the dollars in US financial assets. I suppose that they could hunt around on the international money markets to unload them but that just shifts the problem to somebody else. No, Mr. President, the money isn’t lost from us. Really, the things never left.
Now, here’s where it gets tricky. Most of the dollars end up in our financial centers. Read: mostly our coastal urban cores and Chicago. This does much to explain the bull market in California coastal real estate despite its Venezuela-type government. Trendy blue dots, with their lefty culture in tow, prosper.
Ironically, as recent events will attest, free international markets end up feeding the places that are busy destroying them. The dem-socialist darling of the Dem Party, Alexandria Ocasio-Cortez, could only get elected in one of those pampered locales.
She’s proof that an economics degree did her no more good than Trump’s self-taught trade “wisdom” did for him. It’s the age of gibberish.
RogerG