Trade Deficit or Basic Economic Knowledge Deficit?

  According to the Republican Party Platform (2016), "massive trade deficits" are not good for America's economy.
     Trade deficit is short for "trade deficit between Nation A and Nation B." It's a fairly useless concept. Nations, like human beings, don't conduct trade on a purely bilateral basis. Trade is multilateral. That means that while A may have a deficit with B, they can still have a surplus with C or D. If A doesn't have a surplus with anyone (i.e., produces little if anything that anyone else wants), then no trade involving A can even occur. But as long as trade continues to occur, and keeping in mind that trade can only occur if both parties expect to benefit, we have to assume that A's surpluses are more or less equaling A's deficits.
     The concept of a deficit in trade between only two nations, then, amounts to a kind of statistical cherry-picking. Deficits would only be a problem if they were absolute (i.e. between Nation A and all other nations) and not merely bilateral.
     The whole idea of "parity in trade" as measured according to nations is completely unrealistic and could never be applied consistently in practice. There is no logical reason to think that each other country's value of imports from the U.S. should balance with its exports to the U.S. Some countries have more stuff that Americans want than others. And not all the people in every other country want or can afford a lot of the stuff that Americans make. The point of international trade is not that each and every country will want a certain amount of U.S. exports to offset a certain amount of U.S. imports, but that there will be enough aggregated countries' imports of U.S. exports to offset all U.S. aggregated imports of other countries' exports.

     The only way that trade deficits could be a sign of something wrong is if they were funded by government debt. If the U.S. government issues massive amounts of debt in order to fund its deficit-spending, and if this debt is purchased by persons or institutions in foreign countries, and if this debt is then counted as a "trade deficit," then you might claim that trade deficits are bad. But to be accurate, you'd have to say that the real problem isn't the deficit; it's the government debt that enables the deficit.

On Giving and Giving Back

     I'm a little skeptical of the idea of school vouchers.
     But one thing caught my attention when glancing over an article on the topic:

"Arizona voters will get the last word on expanding a program that gives parents money to send their children to private and parochial schools."     

     "A program that gives parents money." In other words, the state is giving money to some parents who will then be able to send their children to special schools, leaving less money for the rest of the children. Isn't this unfair?
     Let's think about that. Where does the state of Arizona get the money in question? Does the state government of Arizona sell or trade something to willing partners or customers, and fund its activities from the profits of such activity? No. Does the state government of Arizona solicit contributions or gifts from voluntary donors? No. Does the state run a lottery? No. Then how does the state get the money that it gives?
     It comes from taxpayers. That's the sole source of the state money. So, the money given by the state is money that has been extracted by some people from other people by coercion or the threat thereof.
     Considering the source of the state's money, this might mean that some parents are being given back some of the money that was originally stolen from them. So, "give" should, in some cases, read "give back."
     When viewed in this light, maybe school vouchers aren't unfair after all.
   

Tariff Anyone?

     Recently, one sees a lot of warnings in the media about President Trump's intention to institute tariffs on steel. Steel is a strategic producer's good used in many chains of production and a tariff on it can be expected to have a significant impact on the economy. Many economists are saying that it will be an impact for the worse, not for the better. Why do they think they can say that?  To quote from Human Action by Ludwig von Mises:

"If A is in such a way more efficient than B that he needs for the production of 1 unit of the commodity p 3 hours compared with B's 5, and for the production of 1 unit of q 2 hours compared with B's 4, then both will gain if A confines himself to producing q and leaves B to produce p. If each of them gives 60 hours to producing p and 60 hours to producing q, the result of A's labor is 20p + 30q; of B's, 12p + 15q; and for both together, 32p + 45q. If, however, A confines himself to producing q alone, he produces 60q in 120 hours, while B, if he confines himself to producing p, produces in the same time 24 p. The result of their activities is then 24p +60q, which, as p has for A a substitution ratio of 3/2q and for B one of 5/4q, signifies a larger output than 32p + 45q. Therefore it is manifest that the division of labor brings advantages to all who take part in it."

     So it's obvious why people who aim at having more prosperous lives would participate in the division of labor.
     A tariff applied to an existing free market undoes the work of the division of labor. Instead of concentrating on producing the product or service in which a comparative advantage is enjoyed, the tariff makes competing products or services from outside of the tariff area more expensive, i.e., non-competitive. This allows factors of production in the tariff area to be used to produce a product or service that could not compete in a free market. The inevitable result of this hampering of the market is more input for the same output, i.e. impoverishment.