— Dan Mitchell (@danieljmitchell) August 20, 2018
Per Hazlitt, fallacy endlessly stalks economics. The belief that the Fed can decree resources cheap a major fallacy https://t.co/PvLPqFLWXE
— John Tamny (@johntamny) August 20, 2018
Do you watch “The Americans” on F/X? John Tamny shares some thoughts on the economics revealed as part of the storylines.
Unknown, however, is whether the fifth season of the television thriller will measure up to the previous ones. It’s unknown simply because the producers of the show have chosen to make U.S. grain sales to the former Soviet Union an underlying theme. In doing so, they’ve managed to reveal a misunderstanding of basic economics. In fairness to the producers, President Trump’s chief trade adviser, Peter Navarro, shares their confusion.
Navarro believes, as do the Jennings (and by extension, the Soviet foreign policy establishment), that dependence on foreign producers represents a national security threat. The Jennings believe that the U.S., a seller of grain to the Soviets, could starve the U.S.S.R.’s people by virtue of its agricultural scientists creating a bug that would compromise its grain crop. In response, they’re spying on a Soviet defector who is working as a consultant to the U.S.D.A., plus they’ve murdered an American scientist who has helped produce the bug. Basic economics says they needed to do neither since grain, like oil, automobiles, t-shirts, and anything else, is produced globally, and can be sourced globally.
As only John Tamny can, he has used Sunday’s Super Bowl victory to make a point about economics:
Applied to Trump, and his chief policy strategist, Steve Bannon, both have ideas about the policies necessary for prosperity, and both surely believe they’re excellent. Indeed, if the economy falters under Trump, historians will judge both the president and his top adviser negatively. Rightly so, since economic growth is so simple. It’s about removing or reducing the four main governmental barriers to production: taxes (a penalty placed on work and investment), regulation (a tax on production that fails, almost as a rule), floating money values (a tax on trade and investment), along with tariffs (a tax on work).
Trump and Bannon get the first two broadly right, but on money and trade they miss in a big way. Money is merely a lubricant that makes trade (the purpose of our work) and investment (the direction of capital to future wealth creation) more frequent, but Trump’s been explicit in his desire for a weaker dollar that will render both less common. And as workers we’re all importers, by definition (why else would we work?), which means tariffs tax the reason we’re working to begin with.
John Tamny was on C-SPAN’s Washington Journal yesterday. It was a really informative economics discussion. View it here.
Let’s Chat About Economics book links adults and children with the basic principles through familiar scenarios