Wednesday, February 07, 2018

Trade Deficit Is From Strong Economy? Not Really

As usual, Tonelson has a contrarian view on trade which is easily proved.

First, the conventional wisdom.

...According to reporter Paul Wiseman,  “[W]hen it comes to trade, there’s a flip-side to good times [touted by President Trump and others]: ‘A stronger economy will draw in more imports’ as confident consumers seek out foreign products, says Bernard Baumohl, chief economist at the Economic Outlook Group.  (Wiseman is the AP reporter on economic matters.)


...“If the goal is to reduce the trade deficit, we know how to do that — just send our economy crashing and we won’t be able to afford to import as much’ says Bryan Riley, director of the conservative National Taxpayers Union’s Free Trade Initiative.”....


...This relationship holds more often than not. But the notion unmistakably conveyed by Wiseman and especially by the supposed authorities he cites – that it always holds – just doesn’t bear scrutiny....

And he goes on to prove it, using stats from 1961 ffd.  Stick that in your "free trade" pipe, folks.

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