So Much Winning: Football and Trade
A certain football team drove the ball down to the other team’s 1-yard line, but failed to score on the first three attempts. So it was 4th and goal, on the other team’s 1, and the coach called a running play. The QB took the snap, handed it off, and the running back dove over the line for a touchdown. The crowd went wild.
After the game, the owner of the team called the coach in for a meeting. It went like this:
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OWNER: Jim, what did I tell you when I first hired you?
COACH: That you wanted me to win football games.
OWNER: Exactly. Now how do you win a game?
COACH: We score more points than the other team.
OWNER: Exactly. So, we agree that if the other team scores on us, that’s bad. Right?
COACH: Totally.
OWNER: Okay, now in today’s game, there was a point at which it was 4th and goal, and we were on their 1-yard line.
COACH: Yes, I remember it well.
OWNER: And then you called a running play.
COACH: Yes.
OWNER: Even though that meant we had a decent chance of scoring, meaning we would have to kickoff to them.
COACH: Uh, right?
OWNER: Do you agree with me, that it’s harder for the other team to score on us, if they start from their own 1-yard line, rather than receiving our kickoff?
COACH: Uh, sure. I agree.
OWNER: So, since we agree that them scoring on us is bad, and we agree that it’s harder for them to score on us when they start from their own 1, next time you’re in that situation, you tell the quarterback to take the snap and then kneel. I don’t want to have this conversation again.
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If you found the owner’s position compelling, you will also enjoy Steve Landsburg’s latest critique of the Trump Administration.
If the initial exchange had been;
OWNER: Jim, what did I tell you when I first hired you?
COACH: That you wanted me to minimize total scoring by either team
Then the rest of the exchange from the fifth line onward would make more sense.
Steve appears to believe that Trump is not just wanting to “win” at trade by scoring more exports than the other team scores imports but actual wants to minimize international trade as a end in itself. In that light I think his post makes sense.as subsidizing farmers after tariffs have successfully reduced their exports is indeed at odds with this
policy of international trade reduction.
“Then the rest of the exchange from the fifth line onward would make more sense.”
Surely the point is that it does no make sense.
Yes, I assume that was the point. I was attempting to show why I thought this parody of Steve’s position may not work.
Transformer, if you asked Trump how to win at international trade, what would he say?
(A) Drive the trade deficit negative, i.e. have exports exceed imports.
(B) Drive imports to $0.
Also, everybody who is interested should look at my comment(s) on Steve’s post, to understand my motivation in this football analogy.
Well, I would be fairly certain he would say A, but the logic of Steve’s post would be that he would want B (or at least a big reductions in imports). . If that is what he wants then Steve’s post makes sense.
Steve says ‘The President of the United States believes that under current circumstances, much international trade is a bad thing and ought to be discouraged.’ This is equivalent to a football team owner wanting to minimize total scoring by either team (to win a bet?) And the correlation between scoring and conceding in Football; is probably much weaker than that between exports and imports in global trade.
Transformer, yes, I agree that if we assume Trump really just wants to drive imports to zero, rather than driving the trade deficit to zero (or negative), then Steve’s post makes sense. But since you admit that’s not what Trump would say–and it’s not what he has ever said in any clip or quote I’ve seen from him, and it’s not the goal of mercantilism either–then I think my critique stands.
How about this, Transformer? Trump says he is happy about a jobs report. Should Steve blog that that is a contradiction, because if Americans have jobs, they are able to afford imports? Does Trump’s rhetoric commit him to favoring 100% unemployment? Or for that matter, shouldn’t Trump have to order the military to kill as many Americans as possible as soon as possible, since apparently Trump’s single goal in life is to drive U.S. imports to $0, to the exclusion of any other goals?
I suppose that if reducing imports was an absolute priority and the only way that any specific policy is judged is its effect on total imports then all the things you list would be justified.
But couldn’t you come up with an equally absurd list if the single goal in life is to maximize the trade surplus ?
– Kill Americans who spend more than earn
– Kill foreigners who run a personal trade surplus with the USA
And is that based on anything Trump has actually said?
Isn’t it interesting how rarely Trump’s critics either quote what he says or look closely at what he does. That’s all too difficult.
Just for the record, here’s a quote from Trump at the G7 recently:
Gosh, by the sound of it, seems like Trump is attempting to balance out the trade deficits. But strangely Steve Landsburg not only can’t get his head around what Trump is saying, but he resists any attempt to discuss the topic of deficits and instead starts talking about loaded guns and some madman wanting to kill his family (like huh?)
Trump is a nationalistic mercantilist. Or perhaps a mercantilistic nationalist.
He wants his country to be number one in all the good things and is willing to use the power of the state to achieve that. This includes trade policy and subsidies.
In my reading of mercantilist theory I learned that the goal is not to pile up money (bullionism) but to acquire from abroad or promote the learning of the highest-value skills among the native populace. And you do that by encouraging, in some manner, the highest-value manufacturing to reside in your country.
And, according to mercantile theory and no small amount of actual history, this gains some advantages:
It leads to higher wages and thus a higher standard of living. Thus makes his reign look more attractive at reelection time. Or in a monarchy or tyranny keeps the populace sated and thus not as revolting as they might be.
It puts the country in a better position in case of war. The more technologically advanced nation has an advantage in a standard-type war. Not only can it make better weapons, and make them faster and in more quantity than the foe it is much more able to keep itself supplied on the home front.
Being at the top of the manufacturing food-chain, making the highest-value products *is* a money spinner so the earning of cash is part of it but not the main part. It’s nice to have cash, but it’s better to have the wealth that cash can buy.
It puts the country in a much better position to negotiate with other countries if we can produce a thing and they cannot and they really want or need the thing then they are in our power.
And the more smart folks you have spread over however numerous disciplines working on difficult things means the greater the chances of major (or minor) scientific or engineering achievements. And that adds to the country’s strength. It becomes a virtuous cycle.
This was the modus operandi for just about every country that became an economic powerhouse. So I assume Trump knows that and that’s what he is working towards. Not that the US is not an economic powerhouse but in his eyes it can be so much more.
Obviously this means shunning comparative advantage and instead striving for absolute advantage. That means rejecting economic efficiency in pursuit of larger goals even if that means some economic inefficiency for some period of time in some or many industries.
But this also means not letting your own people suffer, so subsidies it is.
His position on this would have looked completely natural to politicians and *most* economists up to about the mid 1850s. And would have been uncontroversial until about WW 2.
So he’s a throwback. He believes in the Old Ways. Those things that even just a few years ago we’re only said in whispers so as to not frighten the children.
I don’t know how smart he actually is, or if he can pull this off but I do know that he’s not going to stop trying and he has a lot of support among the populace, so the next 2 to 6 years will only get more…interesting for free-marketeers.
I believe that he is behaving rationally given his world-view and there’s not much that will sway him, so buckle up you’re in for a hell of an adventure!
“It puts the country in a much better position to negotiate with other countries if we can produce a thing and they cannot and they really want or need the thing then they are in our power.”
Unless someone underbids you:
Time to Lay the 1973 Oil Embargo to Rest
[www]https://www.cato.org/publications/commentary/time-lay-1973-oil-embargo-rest
“Did the subsequent embargo stoke the crisis further? No — it was an economically meaningless gesture. That’s because the embargo had no effect on imports. Once oil is in a tanker, neither Petroleum Exporting Countries nor OPEC nor Knick-Knack-Paddywack can control where it goes. …”
“… Saudi oil minister Sheik Yamani conceded afterwards that the 1973 embargo “did not imply that we could reduce imports to the United States … the world is really just one market. So the embargo was more symbolic than anything else.””
Ask Paul Krugman if you want the wrong answer.
https://i.redd.it/6446wx9yaic11.jpg
awesome, thanks MF