Tuesday, September 18, 2018

Vox Popoli: Darkstream: Trade war is good for the U.S. economy (Or - everything you know about free trade is WRONG!)

From the transcript of the Darkstream:

So today the God-Emperor announced $200 billion in new trade tariffs targeted against Chinese imports, and he's also made it clear that if China goes ahead and retaliates he's going to go ahead and drop even more tariffs on them as well. Now this, of course, has all the usual suspects, all the free traders, all the neocons, all the people who think that responding "uh, Ricardo" is a meaningful response to tariffs, in a tizzy. And they've been upset about this, they've been arguing their theory over and over and over again ever since the first tariffs were announced a couple months ago, but if you noticed something,  what hasn't happened, what consequences were predicted by all of these doomsayers didn't come to pass.

Instead what happened is what anti-free trade people like myself predicted would happen, and what proper economic theory, conventional economic theory, predicts would happen - the economy grew! This is not difficult, this is not at all hard. Now, if you want to argue that the idea of a objective measure of a national economy,  especially one that is denominated in a currency, is a contradiction in terms and that it's not possible to measure a national economy, especially not in its own currency I would accept that argument, but then there's no point in having this discussion because it's not possible to argue about something that can't be quantified becoming larger or smaller. If you're accepting mainstream economics to the point that you're talking about the economy growing or the economy shrinking, then you have to accept the mainstream theory and what the mainstream theory very clearly states is that the size of the economy as measured in gross domestic product is C plus I plus G Plus X minus M, as consumer spending plus investment plus government spending plus exports minus imports, so what happens when you reduce imports the economy grows. You know, this is an absolutely straightforward mathematical relationship, it is a very simple equation, and so it's not at all surprising that despite all the doomsaying,  despite all the ridiculous predictions, that the economy has grown and we've actually seen the fastest growth rates for the U.S. economy since the 1980s.