Tag: trade

Posted on by Tim Worstall

It’s Free Trade, Not Tariff Walls, That Drives Excellence And Competitiveness

It’s competition that drives up productivity – why bother to do that hard work if you don’t have to? Foreign trade is simply that competition from foreigners that similarly drives up productivity. We have historical evidence of this too:

Early 20th century American exceptionalism: Production, trade and diffusion of the automobile
Dong Cheng, Mario Crucini, Hyunseung Oh, Hakan Yilmazkuday 08 November 2019

As the current narrative goes, the loss of US manufacturing jobs is due to competition from China and one way to get the jobs back is by running tariffs up the proverbial flagpole.…

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Posted on by Tim Worstall

Tautology Alert – The Balance Of Payments Balances

It was Adam Smith who pointed out that there is nothing so ridiculous as worrying about the balance of trade. Because we buy more traded goods from foreigners than they buy from us? And? All that then happens is that foreigners must buy more capital items from us than we sell them. Simply because the balance of payments does balance.

As the Office for National Statistics tells us:

1.Main points
The UK current account deficit widened to 4.3% of nominal gross domestic product (GDP) in 2018, from a deficit of 3.5% of GDP in 2017, and remains high by historical standards.

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Posted on by Tim Worstall

Bugger Modern Languages Then

We’re repeatedly told that we need to have more foreign language studies in the UK because. Because we need to now trade with the rest of the world after Brexit is because. That large chunks of the non-EU world speak English while little of the EU does seems to have passed notice. But there’s something rather more important here as well. We’ve absolutely no evidence that a common language increases trade:

The potential impact of machine translation on foreign trade – caution, please
Jacques Melitz, Farid Toubal 01 August 2019

Artificial intelligence has made spectacular progress in recent years.…

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Posted on by Tim Worstall

Dear Ms Truss – No One Wants To Buy The NHS – The Donald

Liz Truss has succumbed to the latest panic about our beloved National Health Service, the Wonder of the World that it is. She thinks the Americans want to buy it.

Seriously? No one wants to buy the NHS, Love. It’s not just that it’s not for sale, it’s that there are no buyers. Even the idea of buying it doesn’t make sense:

NHS will not be put up for sale, Liz Truss to warn US

1.3 million chippy public sector union members?…

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Posted on by Tim Worstall

It’s Uncertainty About Idiot Politicians, Not Trade Restrictions Themselves, Which Is So Damaging

If someone comes out with a dingbat policy – say, we should all tax ourselves more for our temerity in buying from Johnny Foreigner – then that’s bad. But if we’ve had a series of dingbat policies then the truly damaging part becomes the uncertainty of what he next piece of dingbattery is going to be. Rather the problem with all politically directed policy of course, it’s terribly difficult to gauge how stupid the politicians are actually going to be:

Misdirection and the trade war malediction of 2018: Scaling the US–China bilateral tariff hikes
Simon Evenett, Johannes Fritz 01 July 2019

What is the practical and intellectual significance of the Sino-US tariff hikes of 2018?…

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Posted on by Tim Worstall

Guy Verhofstadt Fails The Trade Module In Economics – It’s About Imports You Idiot

Guy Verhofstadt has decided to take time out from politicking to be a President of Europe to teach us all about the merits of free trade agreements. In which he entirely and absolutely fails the trade module of his Economics 101 course. Sure, par for the course for a federast but still, amusing that he parades his ignorance in the national press.

The error is this:

The real global trading power, of course, is the EU, which has recently concluded trade deals with Japan, South Korea and Canada.

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Posted on by Tim Worstall

Apple’s iPhone Explains Why Trump Is Wrong About Tariffs, Trade And China

As innumerable of us have explained over the years there’s nothing wrong with a trade deficit anyway. But when that deficit is being wrongly counted anyway it’s even more trivial. Apple’s iPhone is used here as an example of why that deficit with China just isn’t what people seem to think it is:

The guts of an Apple iPhone show exactly what Trump gets wrong about trade

Crack open an iPhone and you’ll begin to see why President Donald Trump’s ongoing trade war with China doesn’t make sense.…

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Posted on by Tim Worstall

The Trump Administration’s Near Insane New Rules On Trade Balances And Currency Manipulation

Both John Cochrane and Don Boudreaux are decrying – if that’s a strong enough word – the new rules being put in place to try to define currency manipulation. The Trump Administration is worried, as many have been, over whether some other countries artificially reduce their exchange rate so as to boost exports to the United States.

That this is a silly thing to worry about is obvious. The point of our indulging in the practice of trade is so that we get those things which foreigners make better or cheaper than we do.…

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Posted on by Tim Worstall

The IMF’s Warning About Trade Tariffs and Trade Wars

Actually, the International Monetary Fund is arguing that the major worry we’ve all got in this global economy of ours is the silliness with which certain people are approaching that subject of trade.

The basic background to the trade story is:

Tariffs Are A Bad Idea Anyway.
The entire aim of having trade is so that we can go buy those lovely things made by foreigners. We only export so as to be able to swap something for those foreign made goods.

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Posted on by Tim Worstall

Yet Another Reason Why Trade Is So Important – Capital Goods And Investment

As we might – should – have noted the modern machinery that then makes things is increasingly complex. So called “capital goods” thus have few suppliers. There’s no one economy – no, not even the US, or China – that can or even should supply the full range to itself. Yet investment in such capital goods is obviously vital to the future development of the economy. Trade and trade policies are thus even more important than we might think.…

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