I’ve said that George W. Bush had to have been a worse President than Donald Trump because he lied us into war and Trump didn’t.
Well, Trump did. Trump has. Trump has unilaterally declared a trade war, based on nonsense, and a lot of people are going to be hurt by it.
And it’s all based on lies. (Sculpture by Kimber Fiebiger.)
First. A trade deficit isn’t money you have to borrow. It lowers your cost of goods sold. It’s deflationary and allows you to sell finished products for less than before. It makes the whole global economy more productive and efficient. This idea that we “owe” China for its trade surpluses is, simply, a lie.
Second. Trump is going to war on behalf of industries that deserve to fail. Coal hasn’t been a growth driver since the 19th century. Steel hasn’t been vital since World War II. Supporting failing industries is bad industrial policy.
Third. Trump is going after China in precisely the wrong way. If he did want to hurt China economically, he would open the H-1B visa floodgates and encourage every Chinese student coming here to remain. What drives economic growth in the 21st century, as I’ve said many times, is human capital, trained and willing minds. Freedom is our trump card in any conflict with China. Sending them down the demographic cliff while we stay above it, remaining youthful by bringing in the world’s best and brightest, is the only way we’re going to stay in the economic game.