My great colleague Walter Williams calms our fears about the trade deficit. A slice:
International trade operates under the same general principles as domestic trade. When we, as consumers, purchase goods from China and the Chinese do not spend a like amount for goods from us, there is a current account deficit. In 2015, Americans purchased $482 billion worth of goods from China. The Chinese purchased only $116 billion worth of goods from us, producing a current account deficit with China of $366 billion.
Now, here is my question to you: Do you think the Chinese are so charmed with green slips of paper with pictures of Benjamin Franklin that they just hoard them? No way. Instead of purchasing tangible goods, the Chinese purchase capital goods — such as corporate stocks, bonds and U.S. Treasury debt instruments. The Chinese purchase more capital goods from us than we purchase of the same from them. That means the deficit on our current account is matched by the surplus on our capital account.
Troy University economist Daniel Smith (a GMU Econ PhD) exposes claims of “wage stagnation” in America as mythical. (HT John Kurtus)
Randy Holcombe wonders if among Apple’s principled employees is one named John Galt.
Bob Higgs asks if the state can enforce virtuous behavior. A slice:
So, to answer the question I posed at the outset: no, the state cannot successfully enforce virtuous behavior – people will strive to do what they strongly prefer to do – but it certainly can create conditions that foster vastly more harm than would occur if the state simply left people alone in regard to their vices. Every society seems to harbor obnoxious busy bodies and arrogant moral crusaders, and wherever these people gain state support for their favored programs of suppressing vices, the outcome is horrendous. States can do many things, especially such things as committing mass murder, mass extortion, and mass theft and carrying out the relentless bamboozlement of their subjects, but among the many things that states cannot do successfully is the enforcement of virtuous behavior. Trying to make people refrain from doing what they wish to do, especially from taking actions that have no true victims other than those who voluntarily assume the risks, is a fool’s errand, and it is also a type of state coercion that has caused untold needless suffering through the ages and continues to do so today.
Economists Alan Auerbach and Laurence Kotlikoff measure economic inequality today in America and find that it’s not as great as popular myth makes it out to be. (HT Tyler Cowen) A slice:
The facts revealed in our study should change views. Inequality, properly measured, is extremely high, but is far lower than generally believed. The reason is that our fiscal system, properly measured, is highly progressive. And, via our high marginal taxes, we are providing significant incentives to Americans to work less and earn less than they might otherwise.
Ball State University economist T. Norman Van Cott reflects on the civility of the market.
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