Viewing posts from the trade category

Unnecessary Wars

Pat Buchanan and I take opposite sides on some issues, particularly with his emphasis on “culture wars” and his aversion to immigration. Nonetheless, I must give a qualified recommendation for his book Hitler, Churchill, and the Unnecessary War.

Tl;dr version: both World War I and II were unnecessary. The Brits won the war but lost their empire; they overextended, ran up debt to unsustainable levels. The conclusion of WW II effectively made the world safe for Communism.

The United States of America appears to be heading down a similar slope, made slippery with the blood of millions of victims in the Middle East; the military forces are overextended, and debt is at its highest level ever, $20+ trillion and rising.

For a longer perspective, I recommend The Rise and Decline of the State , by Israeli historian Martin Van Creveld.

In this book, Creveld argues that the nation-state originated as and is optimized primarily as an engine of conquest. Militaristic expansion is designed-in. The nation-state has been going out of fashion, largely for two reasons: conquest is uneconomic compared to international commerce, and nations now fear atomic weapons.

Conquest is at best zero-sum; whatever we take, you lose; a vicious cycle.

By contrast, when commerce is shorn of coercion, it tends to be positive-sum; when we exchange voluntarily, both benefit thereby; the world is that much better off when we trade. This is a virtuous cycle.


A Deficit of Proper Language

The words and phrases we use shape our thought. Bad language can lead to bad policy decisions. Daniel B. Klein and Donald J. Boudreaux take aim at a deeply misleading phrase: “trade deficits.”

Deficits sound bad. But deficits look only at part of a trade: the units of account, or dollars in the United States. What were those dollars traded for? Stuff. Food, steel, computer chips, and so forth. We could just as easily say that the United States enjoys a surplus of stuff – we acquire more stuff than we send abroad. Nor is this the entire story; folks abroad are not hoarding ever-increasing piles of green-paper pictures of dead Americans; they send the paper back, and purchase American capital, thereby investing in America, and ultimately encouraging increases in American productivity, and thence American real wages.

Or to put it another way: we do not work to obtain dollars; we work to obtain the things which dollars can purchase: housing, food, electronics, books, and so forth. It’s the “stuff” which motivates us. People in Venezuela are earn ever-increasing numbers of Bolívares, but they’re able to purchase less and less food.