Trump Does Not Understand Trade, Jo Jorgensen Does

Mish

Trump is clueless about trade. His tariffs are a disaster. It's time for a change.

Jo Jorgensen on Trade

Several of my readers have asked me "What is Jorgensen's trade policy? Is she really Libertarian?"

Let's take a look at Jorgensen on Trade and Immigration.

Five Key Ideas

  1. History shows that peaceful commerce prevents conflict. When goods don’t cross borders, troops do. 
  2. This Republican administration has raised prices for Americans, provoked retaliatory tariffs, and harmed American industries. Meanwhile, his opponent in the Democratic Party promises more of the same protectionism. I am the only free trade candidate for president.
  3. Protectionism has been tried before and has been shown time and again to lead to lower productivity, more unemployment, and higher inequality.
  4. It is true that other countries have imposed trade barriers. But reflexively adding barriers of our own as retribution harms no one but ourselves. Higher costs are simply passed on to consumers and workers in the name of this economic nationalism. Tariffs are nothing more than another tax.
  5. As President, I will dismantle all tariffs and any other trade barriers which prevent the flow of goods and services into our country. 

Those are Jorgensen's precise words. I put numbers to what I believe are the 5 key ideas, adding emphasis to points 1, 3, 4, and 5.

My Take

  • The first country that implements free trade coupled with low or no corporate taxes, regardless of what any other nation does, will see a boom in capital, growth, and jobs. 
  • Fair trade is free trade, nothing else.
  • Corporations that hide behind fair trade excuses want protectionism, handouts, and higher prices for their own benefit, not the benefit of US consumers. 

Manufacturing Jobs

Trump Promised to Bring Back Manufacturing Jobs: How is He Doing?

Trump's trade war with China had the expected results. This happened well before Covid hit. 

Trade Wars are Good and Easy to Win

In March of 2018 Trump boldly announced in a series of ridiculous Tweets "Trade Wars are Good and Easy to Win". 

Trump Blames Nafta

US Manufacturing Employment 2020-09A

Trump blames NAFTA. But US manufacturing peak employment occured 15 years earlier. 

Robots have replaced people leading to greater productivity.

Increased productivity means more goods at lower prices to the benefit of all. 

Fed Fights Productivity

The Fed has foolishly waged a battle on productivity and lower prices creating stock market bubbles and excess inequality on top of it. 

Nixon Closed Gold Window

Trump wants to reduce the trade deficit but the cause of consistent deficits dates to Nixon closing the gold window on August 15, 1971.

Balance of Trade vs Gold Window

Balance of Trade vs Gold Window 2020-10-27

The Census Department changed the way they reported the balance of trade in 1992, dropping the old method entirely in 2014. 

However, a chart of both methods clearly shows what happened. 

Trade deficits prior to 1971 were self-correcting. They clearly are not self-correcting now. 

There is considerable debate among economists as to whether the current trade deficit is even meaningful, but Trump is not going to solve anything via his policy of tariffs.

One Candidate Understands Trade

One candidate and one candidate alone has a grasp of good trade policy.

That candidate is Jo Jorgensen. 

Like Jorgensen, I am strongly anti-war and strongly free trade.

As Jorgensen accurately states, "When goods don’t cross borders, troops do."

Vote For Change!

I Endorse Jo Jorgensen for President

If You Want Change There is Only One Choice: Jo Jorgensen

Mish

Comments (41)
No. 1-20
Felix_Mish
Felix_Mish

"first country that implements free trade" Hong Kong in days of yore comes to mind.

Carl_R
Carl_R

Another excellent post.

Realist
Realist

I completely agree with her position on Trade. Though I would not vote for her if I lived in the US. Several of her other policies are simply a no go for me.

Bohm-Bawerk
Bohm-Bawerk

I've come to think our trade policy is really good.
The Fed types some numbers on a computer, the US government 'borrows' the numbers and issues the Fed 'bonds' in exchange. (hard to really call them bonds since Merriam Webster's definition of a bond is "an obligation made binding by a forfeit of money" but since it's not really money...) anyway,

The government passes these computer numbers out to people, companies, etc. and they pass them back and forth among themselves in the US and also pass the numbers to foreigners in other countries. Foreigners get the numbers in their computer and we get real stuff in exchange, like cars, and refrigerators and anything you can buy at walmart, all for some numbers created in a computer. so what if we run a 'deficit' right? It's all good (until it isn't).
there might be some sarcasm in there someplace for those of you who want to freak out when they read this.

phatmaster
phatmaster

Thank you for these. They are motivating others. A lot of people feel sidelined in this election.

TonGut
TonGut

Great post Mish! Oh how I wish...

Sechel
Sechel

Do you support the Trans-Pacific Partnership (TPP)?
JO JORGENSEN VOTERBASENo, there are too many hidden provisions in this specific agreement

QAS
QAS

Trump does not understand trade!! A billionaire does not understand but Mish understands it!!!

nzyank
nzyank

The libertarian position on free trade is too simplistic. Trump is a backlash product of decades of free trade policy that has left many Americans behind. Free trade is not politically viable without also having a plan to address inequality, which is itself a politically difficult topic. This is the problem with libertarianism - it has a great ideal, but does not provide a workable solution.

What about arms trade - do libertarians believe in free trade of military technology? For example to Saudis etc? War, or threat of war is a big compoent of US trade.

Scooot
Scooot

I agree with her free trade ideals. Attempts to protect a country’s industries with tariffs are no different to attempts to protect dying industries within countries due to technological change, they don’t work and only prolong the decline.

Nickelodeon
Nickelodeon

"When goods don’t cross borders, troops do."

This quote is actually attributed to Bastiat originally. Also, free trade is difficult to define when legal tender laws coupled with fiat currency are in play.

Eddie_T
Eddie_T

According to some people I read, the US is probably headed into a future much more isolationist and less dependent on global trade generally, over the next several years, based on changing demographics worldwide...to lower consumption in many countries. Not only that, but the global energy balance has shifted back in favor of US manufacturing.

The upshot is that free trade, as we have known it for the last 40 or more years, may increasingly become a thing of the past, no matter who takes the helm.

Canada and Mexico are our best trading partners....we surely need to maintain good trade relations with those two. The rest basically need us more than we need them, going forward.

.

Sechel
Sechel

From this I infer she would not remove tariffs. If she was against the tarriffs she could have easily said she would remove or at least reduce them

Jo Jorgensen's campaign website says she opposes adding or increasing tariffs on products imported into the country.

KidHorn
KidHorn

Free trade only works if countries don't intervene in Forex.

I'm in favor of free trade without forex intervention, but there are a few exceptions. The US needs to make sure it can produce all the food, basic medical supplies, and energy it needs. If it has to apply tariffs to do so, then so be it.

Per Desteen
Per Desteen

GDP = C+I+G + (X-M)

Reduce M. Solve.

Maximus_Minimus
Maximus_Minimus

If Japan, South Korea, Taiwan, and now China didn't have protective tariffs and other barriers, they would still be agrarian economies. Even at this stage, Japan is watching the exchange rate of the Yen.

Frank10
Frank10

Free trade between countries is a utopian concept. It can never occur in a real world where the bulk of the countries are either outright or garden variety dictatorships, or socialist paradises. The ruling class of those countries would always use the free trade to self preserve and gain unfair advantage over their trading partners.

The idea of the trade and open markets somehow turning those countries into democracies has been proven wrong time and time over again. The only thing that it led to for the other side was a corruption, on a giant scale, of the elite, hollowing of the industries and a total loss of self reliance.

RonJ
RonJ

"Increased productivity means more goods at lower prices to the benefit of all."

Except to all those who were earning good money producing those goods in American factories, that are now closed, decimating communities across the so called rust belt.

Notoldyet68
Notoldyet68

Testing for ability to post.


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