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De Omnibus Dubitandum - Lux Veritas

Saturday, May 14, 2022

My Take on Dan Mitchell's "Don’t Sweat the Trade Deficit"

By Rich Kozlovich

Dan Mitchell gave me permission to publish his stuff years ago, and most of his views on economics and social constructs are extremely well thought out and well referenced.  And of course I know they're well thought out because he agrees with me on them.    How could he be wrong......right? But Dan's a Libertarian, and there are times they take positions that makes me wonder what planet they're from.  Their views on "free trade" falls into that category. 

In short, I don’t really often agree with his positions on what he and others call “free trade”, and while some of his points are valid, mostly I find the rest are logical fallacies.  But he makes interesting points so I ran his piece, Don’t Sweat the Trade Deficit, and while normally I just ignore his pieces on tariffs and free trade - today I really ran it so I could rant against it.

While in principle I agree with the concept of free trade, and I totally agree that “Creative Destruction” is economically and intelligently normal and natural, and even though jobs are lost, more and better jobs are created, and ultimately it makes everyone’s lives better over the long haul. And if government keeps their nose out of all this, “Creative Destruction” creates marvelous advancements, and is unstoppable, because people are always wanting to find something better than what they have.

However, referencing Herbert Hoover, which involves the Smoot Hawley tariff bill is misleading.  After the stock market collapse of 1929 the unemployment rate went from around 2% to just 8%.  After passage of Smoot Hawley, it shot up to 15%, which has clouded our vision of tariffs ever since.  The world's economy was widely different then. We needed the world in 1930. Today, America “is” the world’s economic back bone. If they can’t sell here, they’re pretty much out of the game.  And we need to get this.   It's our game, and if it is our game - and it is - then we need to manage the game to our benefit.  That means making the rules to benefit us.  Define those rules to benefit us, and that includes defining free trade to our benefit.

America has the only true capital generating system in the world.  Let's try and get this right.  America is the only country in the world that can feed itself, fuel itself, arm itself defend itself, create it's own internal market and pay off it's national debt.  We don't need them and before all this plays out American companies will be returning to the United States, which will have the only stable society left in the world at some point.  

As for Dan’s positions in the past claiming “Trump’s damage to international trade will take years to repair”:  That's a load of horsepucky.  These countries are incapable of creating their own national markets in order to survive. We don’t need them, they need us, even with the totally destructive, almost treasonous mismanagement of the Biden administration.

Trump’s tariffs and trade restrictions weren’t merely for economic purposes, they were for geopolitical purposes to stop aggression, especially China and Russia, and they were working. The worst thing that happened in the 20th century was when Nixon opened China up to world trade.

If Nixon hadn’t done that it’s quite possible the Chinese Communist Party may well have ended up on the ash heap of history because Mao had destroyed their economy and their social construct with his murderous insanity, which is still being practiced by the CCP.

The result?

The west has been financing this morally defective and internationally destructive government and their military buildup for decades, and now they’re trying to destroy the west, especially the United States. And so the “free trader” solution is to keep doing what’s destroying us?  Does anyone besides me think that's insane?  That certainly was not Trump’s solution, because it isn’t “free trade”.  

So who has benefited from all this free trade with China and other tyrannous nations? Certainly not the people, since most of them are just above poverty.  So, while Dan's arguments may be valid for America, they're a logical fallacy on how all societies benefit because they're invalidated by the reality of those people's existence.  They are not America.   When the Russians invaded Ukraine, the Russian soldiers were murdering and raping their civilian population, they were also raiding and pillaging the Ukrainian's homes, and they were shocked at the luxury.  Luxury I tell you!  They found Nutella in their cupboards!!!!   Imagine that. 

Nutella in their cupboards.  A chocolate hazelnut spread.  Can you imagine such extravagance?   Well, yes, I can, because you can probably find it in any grocery store in America for a few bucks.  But in Russia, that's extravagance.  So who benefited from all that "free trade"? 

The other reason was to stop the illegal actions of these countries at America’s expense, often involving patent theft. If tariffs and trade restrictions are so bad, why are the nations who are selling so much to the U.S. such major practicers of trade restrictions? If they’re practicing trade restrictions, and they are, isn’t that now part of the capitalist system of competition? If it is, and it is, then why is it intelligent economic practice to ignore all their restrictions and have "one way free trade” at our expense? After all, if they practicing trade restrictions, how can that be defined as free trade? It can’t!

American capitalism is the greatest economic gift ever bestowed on the world. American capitalists are the world’s greatest enemy. Their unbridled greed molds all they do and say, and would easily sell the world down the river for a good quarterly profit.

One caveat to all the above is the Biden administration.  Virtually everything they've done is destructive to the nation's social construct, economy and military.   Along with this insane "free trade" rationale, that's what will take years to repair, not Trump's economic policies. 

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