Build a Wall? Part Uno

(Originally posted on 2017-01-18.)

Politics is a football game, where winning is everything, and there are no stable values. What about the religious right? In the south, they used to vote for Democrats. What about free market capitalism?

By Michael Vadon [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons
The GOP was free-market right up until this election. Now there are Republicans that say, “We want protectionist economic policies. Build a wall!”

Protectionist economic policies will increase the cost of every item that comes from Mexico and China. (Whether that increase takes money away from the manufacturer, the import company, or the end-consumer, depends on the elasticity-of-demand.) Every person’s dollar will buy less, and Americans will be that much poorer, but the next president will still be able to afford a $650 iPhone.

People said that your future president was lying about getting Mexico to pay for the wall, but he actually did mention tariffs during the campaign.

Here’s the thing about tariffs: if you raise the price of imports, then people will buy them from some other place, and then the tariffs won’t generate money to build the wall. In that case, you won’t have a wall, and you won’t have inexpensive goods either.

Mexico and China are in an industrial revolution. At the end of an industrial revolution, you end up with a large middle class. Large middle-class people generally want the option of desk jobs. The USA is in between industrial revolutions.

But there’s a completely different way of looking at trade deficits, and it’s simply this: the trade imbalance just means that the US dollar buys more, and that means that people in the US, on average, are better off, than people in other countries, and USA-first people like trump shouldn’t want to mess with that.

Me? I think that people are people, and I don’t care whether they live in China, the USA, or most other places, but that’s a “Paul opinion”. It’s not liberal, and it’s not conservative.


By Crossswords (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons


Cumulative current account balance per capita 1980–2008 based on International Monetary Fund data. Emilfaro [Public domain], via Wikimedia Commons

The two charts above show that the USA currently has the greatest trade imbalance, while simultaneously making more protectionist policies. Here are a few possible explanations:


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