More thoughts on trade

So this morning, wanting something to watch on TV while having breakfast (I don’t have much time for TV), I turned on a documentary on human trafficking along the southern border. As it turned out, it wasn’t such a thing as to watch over breakfast. It’s is a miserable and appalling demonstration of the absurdly idiotic things government does in the name of keeping domestic wages elevated that detracts from achieving some sort of global equilibrium, and inflicts more harm than good on average workers in aggregate.

A reader helped me get my hands on a copy of the “trade is bad” paper referred to in my last post. And thinking of the issues attempted to be explained while narrowly framed in terms of the US trade relationship with China, it makes some qualitative sense, but is sketchy in terms of quantifying the problem. The reader has to make some giant leaps in logic to correlate causes and effects presented. The difficulty here, I think, is I don’t believe that the problem can be framed in terms of trade in order to be explained in a way that fits with macro theory and makes sense; it is much larger than that.

I believe that the problems encountered while conducting commerce with the rest of the world can be explained in terms of the supply side being global, and attempts to impose an artificial price floor on labor, whether hard and fast, like the minimum wage, or in all of the other various ways government tries to do this that result in a sort of nebulous price floor, social programs that pay people to not work, militarized borders, etc…, creates surplus.

These actions put up a flashing neon sign that says – if you want to do business here, bring lots of cash, but be sure not to borrow it because we do contradictory, incoherent, and idiotic things with monetary policy to keep wages under control. (This is just one more reason why inflation targeting is a bad idea)

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