Trump’s Trade Policy—A Reductio ad Absurdum

Before and since becoming president, Donald Trump has consistently maintained that the U.S. trade deficit in general—and the trade deficit with China in particular—is bad for Americans. As he says, again and again, Americans “lose” by importing goods from abroad and gain by exporting goods to foreigners. His tariff increases and newly imposed tariffs have been aimed, or so he claims, at reducing the U.S. trade deficit and thereby cutting Americans’ “losses.”

Economists and people with an elementary understanding of economics have condemned this view from the beginning as folly and as harmful to the economic well-being of Americans and foreigners alike. But the president and his advisors have ignored or shrugged off such criticism, dismissing it as at variance with what people can see plainly with their own eyes, such as increased employment in certain firms benefiting from tariff-hobbled foreign competition.

So, let’s consider the president’s trade policy in, as it were, its very best light. Suppose, then, that the government succeeded in eliminating the trade deficit entirely. Residents of the USA would continue to sell huge quantities of goods to foreigners but buy nothing at all from foreign sellers. The trade deficit would be not only diminished but wiped out and replaced by a huge trade surplus. Trumpian triumph!

Note, however, that such an outcome would be impossible to sustain for long even if it could be attained (which in fact it could not). Foreigners would be spending huge quantities of dollars to purchase goods from Americans, but they would have no means of earning dollars because Americans would not be buying anything from them. Foreigners could continue to make such purchases only if they received dollar credits from foreigners. But lenders would have no incentive to lend dollars to the Chinese, say, when they knew that the Chinese would have no ability to repay the loans because they would have no means of earning dollars in the future by sales to Americans. So a big U.S. trade surplus requires that totally implausible assumptions be made about international transactions in general and international lending in particular.

But apart from such practical difficulties and impossibilities, a Trumpian trade triumph, even if it could be achieved, would be a horrible objective to attain. Americans would be employing labor services, natural resources, and other productive inputs to produce goods and shipping them to foreign buyers. In exchange, they would receive nothing but bank account balances. Such a deal! Surrendering huge volumes of valuable goods and receiving in return larger numerals in people’s bank account statements, more dollars that could not be used to purchase anything, no matter how important or desirable, from abroad—all such purchases having somehow been stopped by a harebrained government and the economic ignoramus in charge of it.

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You Can Fight City Hall, but You’ll Almost Certainly Lose

One of the chief reasons why almost every regime in the world has converged to a system of participatory fascism is that this system creates or retains a great variety of institutionalized opportunities for the state’s victims—who compose the great majority of the people—to challenge the state’s exactions and to “make their voices heard,” thereby gaining the impression that the rulers are not simply oppressing and exploiting them unilaterally but involving them in an essential way in the making and enforcement of rules.

These opportunities help to allay public resentment and anger, assuring people that they have had “their day in court,” and thereby serve to prop up the regime and its ongoing exploitation. These official avenues of protest and resistance are, however, rarely of any real avail. The oppressed citizens and other residents are protesting the actions of legislatures, government executives, bureaucracies, and courts run by the very people who are engaged in the oppression and plunder. The opportunities for voicing feedback are, in effect, ways in which people are allowed to request that the slave master stop beating them or reduce the severity of the beating. Rarely do the petitioners win, and even when they do, the costs of making their appeals, especially through the legal system, guarantee that they will be impoverished in the process.

Heads you lose, tails you lose. I promise you that in making the foregoing statements, I am speaking not only from my scholarly engagement with the matter but also from my personal experience, some of which grinds on seemingly endlessly even as I tap out this cri de coeur.

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You Don’t Make the Tax Laws, but You Do Pay the Taxes

The Internal Revenue Code is a massive part of the laws of the United States of America. It is complex. I daresay no single human being, even the most expert tax lawyer, understands all of it, and most people understand none of it. Many provisions are almost incomprehensible except perhaps to that most expert tax lawyer, and even he is probably uncertain about many details. Highly paid tax accountants and tax lawyers constitute a large industry, spending their time trying to tease out the meaning of the tax code and to divine how the IRS will interpret its legislative power.

Yet one thing is certain: virtually nothing in the code is there by accident. Every incomprehensible provision is there to serve the interest of someone who made it worthwhile for a politician to direct his staffers to put it there at an opportune point in the legislative process.

You didn’t determine any of these provisions. Unlike those who did put them there, often with billions of dollars at stake, you don’t count. Your role in the entire taxing affair is simple and normally boils down to two things: one is to pay the amount that the IRS tells you to pay, and the other is to be punished with penalties and interest if you don’t satisfy the IRS.

A third, of course, thankfully never reached by most people, is to go to prison for tax fraud. Imagine that: tax fraud. The mind rebels at the very concept. It’s as if Jesse James and his gang rode into your town, took everyone’s wallet and watch, and then shot a few people for failing to hand over everything the gang demanded.

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Community, True and False

Leftists affect to love the community. When they make or support a political proposal, they are likely to say that it is for the community, that it is what the community wants. In discussions with such people, I find that they think I’m crazy for challenging their conception of community and what serves the community’s peace and good order. They take me to be some sort of rugged individualist, the sort of character Ayn Rand might relish.

They’re wrong about me. I place a high value on community, and I feel sorry for people who have no membership in one.

But I distinguish true community and false community. The line that separates them is the locus of points at which people bring government compulsion to bear to compel those who disagree with them to fall into line or suffer punishment, the line that separates those who recognize and respect everyone’s natural rights and those who do not.

True communities form spontaneously and function voluntarily. False communities represent groups of people who use political means to victimize those outside the group and violate their natural rights. True communities have no need for cops; false communities cannot get by without them. False communities are more accurately described as political factions.

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Does Ideological Dystopia Await Us?

Imagine a world in which the great majority has no respect for facts or for truth of any sort, where ideological convictions rule almost everyone’s understanding of the world, where truth has become an endangered rhetorical species on the brink of extinction.

In such a world, facts would still exist, of course, and true propositions would still stand in stark contradiction of false ones, but hardly anyone would care.

The scientists would have been co-opted to support the prevailing ideological narrative, along with the news media, the schools and universities, and all the organs of respectable opinion. People who dissented from the orthodoxy, especially on such sensitive matters as global warming, abortion rights, and discrimination against various state-defined victim classes, would be convicted of hate crimes or some such thing and packed off to prison.

Too dystopian for your taste? No matter. This future is, I think, one with a substantial likelihood of coming to pass.

Some of us thought that the internet would save us from the lies and self-interested distortions of rulers and their running dogs. But experience has shown us that the internet is a powerful engine for transmitting mistakes, innocent and not-so-innocent, as well as outright lies and genuinely fake news. So cyberspace has become not a forum for sorting out truth and falsehood, but a battleground of ceaseless ideological combat where truth seekers, if any remain, stand little chance of sorting out true reports from false reports and propositions.

Some continue to maintain that truth will ultimately triumph because it conforms to reality, whereas falsehood does not. But I’m not convinced. Masses of people have often plunged over the cliff for the sake of ideological commitments, and they may well do so again, all the advanced technology notwithstanding. Indeed, that technology may be the high-speed train that takes us there.

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My Personal Trade Deficit Is Killing Me – or So Trump Would Have You Believe

A few days ago, my lunch was as follows. Besides some Chilean grapes I had acquired via Lucio and a host of other, unknown middlemen (gracias al Mano Invisible), I had some homemade Oaxaca-style cheese and some homemade tortillas I purchased from local people who peddle their products along the beach road. (Oh, yes, I seasoned my quesadillas with some very tasty locally made salsa picante de habanero y pina.) Well, so what?

You see, it got me to thinking. I am running a terrible trade deficit with the local Mexicans. I keep giving them pesos, and all they give me in return are delicious foods and very helpful labor services from time to time. As President Trump would tell you, this is an awful situation for anyone to be in.

If I’m ever going to be as prosperous as Trump is making the USA, I will have to find a way to get the local people to buy my consulting services, while I buy nothing from them. By accumulating a pile of worthless pesos—as worthless as the foreign currency payments that U.S. exporters gain when they only hoard them, rather than using them directly or indirectly to finance imports—I will make myself Great Again.

I may get pretty hungry in the process, but what the hell, I’ll be as Great as Trumpian America. After all, as any mercantilist will tell you—and Trump tells you incessantly—the only thing that matters is getting a lot of money by selling to foreigners, whereas getting a lot of foreign-made goods and services is a terrible thing.

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