Monday, April 17, 2017

Why Trump's Trade Adviser Should Be Replaced By Dead Men at Amazon




By Robert Wenzel

I have made plenty clear that President Trump's trade adviser Peter Navarro has a remarkable failing when it comes to understanding international trade basics. It would be very difficult for him, for example, to hold the hostile view he does toward open international trade if he just understood the concept of comparative advantage.

That said, it has always been something of a mystery as to how this know-nothing trade kook hooked up with Trump.

Vanity Fair in a new article has solved that mystery:

 At one point during the campaign, when Trump wanted to speak more substantively about China, he gave [his son-in-law Jared] Kushner a summary of his views and then asked him to do some research. Kushner simply went on Amazon, where he was struck by the title of one book, Death by China, co-authored by Peter Navarro. He cold-called Navarro, a well-known trade-deficit hawk, who agreed to join the team as an economic adviser. (When he joined, Navarro was in fact the campaign’s only economic adviser.) 
"Speak more substantively about China" by getting advice of a guy who doesn't even understand trade basics? Of all the books om Amazon and Kushner comes across this wacko stuff?

Hell, Kushner would have been much better off if he just pulled a few comments from books of dead economists to guide trade policy rather than bring Navarro on to the economic policy team.

Consider:

Henry Hazlitt in his 1946 book, Economics In One Lesson, wrote this:
The real gain from foreign trade to any country lies not in its exports but in its imports.
This is absolutely correct. We gain when more goods flow to us. In fact, I wouldn't mind complete 100% support of goods by foreign governments that would be dumped for free on us! I could use more free electronic gadgets. But I am satisfied with 25%, 30% and 40% Chinese manufacturing subsidies dumped on us cheaply. Why does Navarro want to screw this up?

W. M. Curtiss in his 1953 book, The Tariff Idea, wrote:
 Perhaps the greatest obstacle to the removal of trade barriers is. the belief expressed by small groups of producers: "Yes, but our case is different; an exception should be granted in just this one instance." Grant a single exception, and the floodgates are opened to all
sorts of pressure groups. The result will be a continuation of the political chaos which we now find in the area of trade restrictions...
Government grows strong and dictatorial by the granting of special favors. Trade restrictions are just another of the handouts which a government can grant, thereby
increasing its power over individuals-to the detriment of all.
The point of view set forth in this discussion argues neither for nationalism (isolationism) nor·for internationalism. Both of these terms imply a kind of design
by government. And both, when implemented by governmental design - force - have very serious consequences. Instead of aiming for either of these objectives, we would argue merely to allow individuals to trade freely with one another, when and where they wish with a minimum of governmental interference.
This talk of a trade deal between Trump and Chinese president Xi Jinping can't be anything but what Curtiss references. Special trade opportunities for some crony businesses close to one of the two governments, with restrictions on other firms. Slice and dice, If you aren't at the table, you are on the menu.

We don't need these kinds of trade deals that benefit cronies.

In a collection of essays written by Ludwig von Mises, Money, Method and Market Process, we have this very important observation (Chapter 10: Autarky and its Consequences):
Even if all other countries cling to protection, every nation best serves its own interest by free trade.  
This is correct because it is all about letting goods flow to us.

And then from the same chapter, we have this from  Mises;
It is hopeless to expect a change by an international agreement. If a country thinks that more trade is to its own advantage, then it may always open its frontiers. 
This is the Cullinan nugget of free trade theory. It explains why all we need to create sound trade policy is what Mises, Hazlitt and Curtiss have taught us. For the key to a sound trade policy is open trade, not international agreements. All the trade advice we need, we can get from dead men on Amazon.

There is no need for Navarro or any other trade adviser in the White House.

Robert Wenzel is Editor & Publisher of  EconomicPolicyJournal.com and Target Liberty. He also writes EPJ Daily Alert and is author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics, on LinkedIn and Facebook. The Robert Wenzel podcast is on  iphone and stitcher.


2 comments:

  1. As odious as the crony trade deals are, I actually see them as somewhat of a departure from the the anti-trade fundamentalism of people like Navarro (and much of Trump's reflexively xenophobic base) so to me this isn't an unambiguously bad development.

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  2. So Kushner went shopping for an "expert" that is in line with the Dons trade policies. I wonder if Kushner has Amazon Prime (free shipping).

    Seems as though in Economics if you have a particular view, you can find an "expert" that will justify that view. Of course the more a view benefits the State and its cronies the more "experts" you can find.

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