Having read numerous endorsements of President Trump’s current trade war with China, I’m considering offering these folks a deal: the opportunity to run a perfect trade surplus against me. I’d offer this in the spirit of Julian Simon’s wager with Paul Ehrlich, albeit much more smart-alecky. (Hey, I gotta be me.)
I’m asking Econloggers to help me fine-tune this offer. Here’s what I have so far:
I want to offer the deal of a lifetime to President Trump, his supporters, and all others who believe the U.S. trade imbalance with China is unfair to America: run a perfect trade surplus with me!
To seize this opportunity, compile a list of all your property that you think I’d want: real estate, vehicles, financial assets, jewelry, furniture, appliances and electronics, and so forth. Also, list any services that you can provide to me: housekeeping, yardwork, housepainting and window-caulking, cleaning out the garage and cellar, etc. Send your list to me at tfirey@cato.org.
I’ll decide which of your goods and services I want, and you can send them to me, just like Chinese exports! In return, I’ll send you “Firey bucks”—my own currency that can be used to purchase goods and services from me, just like American dollars purchase American goods and services! Under this exchange, I’ll have a trade deficit with you and you’ll have a trade surplus with me. However, to make this a perfect deficit/surplus, you must never redeem those Firey bucks, so that your surplus and my deficit are enduring!
According to President Trump, this would be a terrible hardship for me and a terrific benefit for you. So, if you are a true supporter of Trump’s trade policy, I implore you to seize on this offer. Please! Make yourself great again!
If you have any suggestions for how to improve this proposal, please share!
P.S.: I would argue that there is a problem connected to the Chinese trade deficit, but that problem has to do with the United States borrowing funds from China and then spending the money on foolish things. So maybe I should include the condition that my “trading partners” can also lend money to me—though, of course, only with my agreement, and I won’t be nearly so foolish.
This concern about borrowing, however, does not mean the trade imbalance itself is a problem.
Thomas A. Firey is a Cato Institute senior fellow and managing editor of Cato’s policy journal Regulation.
READER COMMENTS
Jon Murphy
May 31 2019 at 10:48am
Not going to lie…I kinda want “Firey bucks.” They sound pretty badass. Please tell me they’re holographic red, yellow, and orange?
In all seriousness, some might object that the problem is that the trade balance does not equal zero, not that we don’t have a trade surplus. You may need to tweak a little bit on this point (albeit it would make your point stronger by showing value is subjective).
Dennis
May 31 2019 at 3:25pm
This is not a good analogy. By this argument, Chinese surplus and trade with the US is horrible for China.
Jon Murphy
Jun 3 2019 at 12:17pm
By the pure logic of the Trump Administration’s argument, that is indeed the case.
Thomas Firey
Jun 3 2019 at 7:23pm
Jon: As soon as I have some free time, I’ll PhotoShop you some well-earned Firey Bucks!
Dennis: Ah, but that’s why it’s an excellent analogy. At heart, the argument over the Chinese trade surplus is this: they send us valuable stuff in exchange for green-dyed cotton paper that we can easily and cheaply replace at very low cost. (Well, actually, not even paper, but series of 0s and 1s signifying paper.) Supposedly that’s a terrible deal for us and a great deal for China, but personally I’d far rather have valuable stuff rather than easily replaced green-dyed cotton paper. Wouldn’t you?
Jon Murphy
Jun 4 2019 at 12:54pm
Thanks! And don’t worry; there is no danger of me spending those bad boys
Comments are closed.