There aren’t a lot of things economists agree on. One is that trade is good.
Donald Trump won a second term in the White House by promising a bonfire of the verities—the truths that wonks in economic and foreign policy circles hold sacred.
Free trade is out, protectionism is in. Worrying about the debt is out, tax cuts are in. The US security guarantee is out, do-it-yourself defense is in.
The established order Trump wants to overturn hasn’t covered itself in glory.
Another idea most economists agree on: Big deficits are bad news.
The Biden administration is already playing fast and loose with fiscal policy.
The deficit for 2024 is projected to come in close to a nosebleed-inducing 7% of GDP, a consequence of making too much stimulus during the pandemic and failing to rein in spending fast enough after the emergency was over.
Bond vigilantes are already punishing Washington for its borrowing excesses. The yield on 10-year US Treasuries almost touched 4.5% in November
Pax Americana, paid for with US blood and treasure, has been a defining feature of the post-World War II global order.
Trump’s “America First” instincts mean it can no longer be taken for granted.
Tom Orlik chief economist Bloomberg Economics 10 December 2024
Economists Are Wrong a Lot But Not About Tariffs
Trade was not the problem, and restricting it is not the solution.
Yes, opening up trade with China resulted in 2 million workers losing their jobs; by one estimate, Chinese trade accounts for 10% of lost manufacturing jobs between 1999 and 2011 alone.
Even more were lost because of NAFTA. But most of the job loss was due to automation.
America still makes things — in fact, it makes more than ever. It’s just that manufacturing has become more technological, requiring fewer workers with more skills.
The result is higher productivity as well as living standards.
Allison Schrager Bloomberg 12 December 2024
Allison Schrager
https://englundmacro.blogspot.com/2024/12/the-oxford-curriculum-allison-schrager.html
Why Trump’s Plan to Escalate Tariffs Has So Many Haters
https://englundmacro.blogspot.com/2024/10/why-trumps-plan-to-escalate-tariffs-has.html
Tillbaka till Rolfs länktips 10 december 2024
https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-10-december-2024.html
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