Monday, August 8, 2016

Trump's Top Economic Adviser Absurdly Thinks Trade is a Zero-Sum Game

Donald Trump recently announced his economic advisory team. it included Peter Navarro.

Navarro is not exactly someone that you would describe as sound on basic economics, unless, say, you are a  member of the Flat Erath Society.

Yet, inside the beltway economist Tyler Cowen calls him the most influential person on the Trump economic team.

Tim Worstall quotes Navarro:
Is it about declining U.S. dominance?
That would be jingoistic. It doesn’t matter to me who’s the most powerful or profitable country in the world. All countries want to be prosperous. What’s happening is a zero-sum game between China and the U.S. where their gain is our loss. It’s about the fact that we don’t make things any more, that we lost our manufacturing base, the 25 million people who can’t find a decent job in this country, the zero wage growth. I want consumers to connect the dots, to go to any store and look at the label and connect the dots between buying cheap China products, which is better for the wallet, and all the other things we lose, like jobs.
Worstall then adds:
The idea that an economist could describe trade as a zero sum game is an absurdity in and of itself. It’s a voluntary exchange – and thus, by definition, it must be beneficial to both parties taking part in it. It’s also simply not true that the US has lost its manufacturing base – manufacturing production is just around all time peaks (yes, obviously, adjusted for inflation). So Navarro is wrong both in theory and also in fact. This does not bode well for whatever economic policy Donald Trump might follow if elected.

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