Since so many who should know better seem to have come out strong for the Trumpelstiltskin’s economic “plan,” this concise open letter from economist Donald Boudreaux should prove in explaining why it’s actually mostly a mash of bunkum. As he says, It literally hurts his brain to hear the read the economic idiocy emitted by Trumpkins:
Wilbur Ross’s and Peter Navarro’s defense of Donald Trump’s economic policies is mostly a mash of bunkum (“A Vote for Trump Is a Vote for Growth,” Oct. 26). Consider this claim: “Donald Trump will cut taxes, reduce regulation … and eliminate our trade deficit through muscular trade negotiations that increase exports, [and] reduce imports….”
Cut taxes? Bunk. Trump famously promises to raise taxes on Americans who buy imports. Reduce regulation? Rubbish. Trump promises moregovernment intrusions into Americans’ commerce with foreigners.
As for ‘eliminating’ our trade deficit, Trump might indeed succeed on that front. But such ‘success’ would be regrettable, for it would be the inevitable outcome of the American economy being made an unattractive destination for investment. (Ross and Navarro seem to be unaware that to “eliminate our trade deficit” – such as was done, for example, during the Great Depression – is to eliminate net contributions by foreigners to increasing the size of America’s capital stock.)
But Trump’s most absurd promise is to enrich Americans by increasing exports and reducing imports. Imports are what we voluntarily buy and exports are the price we pay. Therefore, a policy meant to increase exports while decreasing imports is a policy meant to force Americans to pay more to foreigners and to receive less in return – a decidedly unartful deal the architect of which would deserved to be fired.
But the Trump camp’s confusion runs even more deeply. Exporting for Americans is worthwhile only because it supplies us with the means to purchase imports, either currently or in the future. So a policy that aims both to increase exports and to decrease imports is akin to a policy that aims both to increase people’s spending power and to decrease it. It’s a policy meant to give Americans greater means for acquiring imports as it simultaneously strips Americans of the freedom to use those means. It’s the economic policy equivalent of an attempt to square a circle.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030