Donald Trump, with a degree in economics and ability to converse with highly educated professionals and pols on extremely complicated matters, has chosen to speak to the people in their every day language.
Red:
Yes, well, perhaps Trump thinks that, just as there used to be what the old folks called "the new math," there is today "the new economics." The economics Trump learned are the same ones I learned not all that many years later (the man is ~10 years older than I), so maybe he simply doesn't remember what he ostensibly learned. ("Ostensibly" because Trump was born to the strata of society for which a "gentleman's C" was quite sufficient if one had the financial backing of a wealthy family to launch one into adult life.) The fact of the matter is that having a degree in economics, I'd expect Trump to advocate policies that are consistent with the laws of supply and demand, but he does not.
Blue:
On matters of economic principles, one can use "everyday language" to very precisely explain every nuance pertaining to how trade and exchange work/happen. Trump uses everyday language to convince people that free trade will achieve something that it quite simply will not.
- Benefits of free trade | Economics Help -- When one reads this or any other credible discussion of the merits of free trade, nowhere will one find economists saying that the aim or outcome of free trade is to create jobs. The reason one will not is because free trade can only produce jobs if one has a comparative advantage in producing "something."
- One makes one's money go farthest by importing goods and services for which one lacks a comparative advantage in producing them because others can produce and them at lower prices, while still earning an acceptable (to the producer) profit, than one can do oneself. That is to say, one imports from the folks who have a comparative advantage in producing those goods/services.
- One creates jobs by producing and exporting goods for which one has a comparative advantage in producing them. Why, because other folks/nations will prefer to buy those goods/services from "you" because you can produce and sell them at lower prices, while still earning an acceptable (in this case "you" as the producer) profit, than they can themselves do.
- Our Comparative Advantage - NYTimes.com
With an abundance of low-priced labor relative to the United States, it is no surprise that China, India and other developing countries specialize in the production of labor-intensive products. For similar reasons, the United States will specialize in the production of goods that are human- and physical-capital intensive because of the relative abundance of a highly-educated labor force and technically sophisticated equipment in the United States.
Have you ever heard anyone running for President ever
identify what the U.S. has a comparative advantage in producing? I sure haven't, yet I know damn well that human capital (not labor) is one thing the U.S. has a comparative advantage at. It's precisely why I work as a management consultant for a U.S. firm, but spend well over 3/4th of the year outside the U.S., and not surprisingly, I'm very well compensated for doing so because I and my firm sell that which the U.S. is best equipped to sell to anyone on the planet who wants to purchase intellectual capital, or what is sometimes called "knowledge-ware."
That "knowledge-ware" is one of the things the U.S. in which the U.S. has a competitive advantage is why high quality education and doing very well in school/college/grad school is essential for American citizens. It's also why it's critical that U.S. citizens, as many and as much as possible, be very well educated and demonstrate as much on a routine basis. The wider the range of topics in which one is at least somewhat savvy and the wider the range of ideas one can synthesize, the better, which is why I strongly encourage young people who focus their collegiate study in a technical/scientific field to also take a "healthy dose" of liberal arts and/or social science classes too, at least minoring in one if at all possible. One's goal, given that one is an American and that our competitive advantage is in "knowledge-ware, needs to be that of using school/college to become a "jack of a lot of disciplines and master of one."
Put in computer role playing game (RPG) parlances, as an American, one's best off being the balanced adventurer than being the ultra specialized one, although being highly specialized can be equally successful. In that regard, career success is very much like an RPG video game.
As for why it is that to many protectionist stances such as those Trump, Mr. Sanders and others advocate, Drs. Kaempfer, Tower and Willet explain it quite clearly in "
Trade Protectionism For the Encyclopedia of Public Choice."
In common practice, economists ascribe the property of aggregate economic efficiency to any policy moves that create sufficient gains so that the winner could compensate the losers with something left over, i.e., to any policy which expands the utility possibility frontier beyond the initial equilibrium. In practice, however, such compensation is seldom paid; a policy that expands the utility possibility frontier often makes some worse off. From the standpoint of political economy, policies that potentially raise everybody’s utility have much less appeal than policies that actually make everybody better off. Despite the frequency with which international trade theory is mischaracterized, it does not prove that everyone gains from free trade, even when there are no domestic market failures. It proves only that in money terms the gains from free trade in total are greater than the losses, in the sense that there is some set of transfers from winners to losers that could make everybody better off. If we assume that most individuals and groups are more interested in their own costs and benefits than in those for their country or the world, then it is perfectly consistent with rational behavior for some individuals and groups to favor trade protection [and reject free trade policies like NAFTA et al] for their industries.
Now, as I found out what Dr. Kaempfer
et al stated way back when I took economics in college, I am certain that Trump did too. Another thing I found out is that one must make a choice:
- Does one want their leaders to protect a given (or several) industry to make it easy for one to keep working in an industry that sooner or later must give way to something else because of how comparative advantage works?
- Does one want one's leaders to advocate for and enable retraining so that one can get a job in an industry that will for the foreseeable long term be one that will not be forced out by the way comparative advantage works?
- Is one amenable to prices, as a result of lost free trade agreements and implemented protections, dramatically and/or quickly rising as a result of more goods being made in the U.S. with its far higher wages?
- If yes, just what does one think the government can do to drive the prices back down while also making sure one doesn't lose the job one got due to the protections and domestic production?
- If yes, what is one going to do (other than complain) when (because, as shown above, it will be a "when" not an "if") all prices except the price of labor (wages) increase faster than they do now?
- Does one prefer one's leaders act in the overall long run best interests of the nation or in one's personal short run best interests, recognizing that one's own long run best interests are the same as those of the nation as a whole because, quite obviously, one is a citizen of the nation and "a rising tide lifts all ships?"
Those, along with a few others, are the questions one needs to ask oneself and carefully consider the various alternatives. It's quite likely one will get pretty much what one asks for either way. The trick is to be careful of what one requests, lest one get it.
Blue:
With all that covered, I finally can come back to this matter of Trump speaking to people in everyday language. Frankly, whatever linguist style he uses, the fact is that Trump, for having a degree in economics and presumably knowing the same exact stuff I've covered above, isn't telling "everyday people" that stuff. He's not making it clear just what are the downsides of the protectionist policies he's advocating. To hear him tell it, there are no downsides; everything's going to be just great. Every economist on the planet knows better, and from just reading the preceding discussion and reference materials, you should too.
No, Trump's no more candid with the American people about the trade-offs (no pun) of his trade and other economic policy proposals (if one can even legitimately call them proposals, but that's another topic). That all of the current crop of candidates are in equal measures trying to stuff their "rose colored" approaches down our throats without even remotely broaching the downsides is a travesty. It's also why I've not yet committed to anyone.
It's, of course, no surprise why no candidate explains the upside and downside of their economic platform/preferences. Every one of them, for whatever they do or don't know about economics, most certainly knows that overwhelmingly voters:
- don't know half of squat about economics and that aren't going to on their own bother to learning enough to fully grasp just squat, let alone actually have a strong command of basic economic principles.
- will not vote for them if they were to tell them there long and short term upsides and downsides, to say nothing of what the actual downsides are.
- would sooner today hear "Everything's gonna all work out. We will overcome any and all obstacles. The future's gonna be so bright you'll have to wear shades," and later hoist their leaders by their petards when it doesn't all go as promised.
Another thing Presidential candidates all know is that there is yet another dimension that economic policy making is like an RPG video game. When one starts an RPG game, one must allocate a fixed set of points (resources) to various skills and once that's finished, one cannot change that initial allocation. At best, one can try to make up for the mistakes one discovers in the course of the game by directing additional "skill points" here or there in contravention with how one initially allocated the one's with which one began the game. In the words of bridge players, the "game" of national economics is one in which one must play the hand one is dealt to be the best of one's abilities, making the most of the cards one and one's partner has, not moaning and groaning about how much better seem the other team's cards.
Lastly, every remaining candidate is well aware that economics is a social science. What that means is that like the so-called "hard sciences," it's laws, theorems, and principles basically don't change, but being "social" they can change if and only if human nature also changes. Now human nature isn't going to change anytime soon, which means neither will economics. We can go from a mostly capitalist economy to a fully command economy, and economics would make, and we'd observe come true, exactly the same predictions econ makes today.
Now that thing that irks me more about Trump is that his "thing" is being a straight talker. Well, since when does a straight talker not tell his audience the truth, the whole truth and nothing but the truth. Moreover, on economic matters, Trump (assuming he paid attention in college or B-school) most certainly should know of the trade-offs discussed above. Has he even made the barest references to the fact that any even exist? I have yet to hear one peep to that effect. That even as the populist option, that even as the candidate who isn't beholden to "this or that lobby." Yet, knowing what I know about economics, and seeing he's being less than forthright about the same info, I'm supposed to trust him? I don't think so. Lies of omission are still lies.
Link summary, in order:
- Layman's level discussion of the benefits and disadvantages of free trade.
- Layman's discussion of comparative advantage.
- Layman's discussion of what are the U.S.' comparative advantages.
- Scholarly paper about how the U.S.' comparative advantage has changed over the years.
- Scholarly discussion about protectionism and its effects.
- Video intermission (LOL)
