President Trump often seems as though he’s stuck in the ’80s. But maybe the better comparison is to the 1680s, not the Reagan era.
...These trade policies, and the supposed rationale behind them, bear an uncanny resemblance to classical mercantilism.
...In a nutshell, mercantilists believed a country should try to maximize exports and minimize imports.
The logic was this: Military power comes from wealth; wealth comes from accumulating gold and silver; and the way you accumulate gold and silver is through trade surpluses. Your merchant ships should go out loaded with attractive goods and came back overflowing with shiny specie.
...It was a zero-sum view of the world....
...[Adma Smith] (and subsequently other classical economists, such as David Ricardo) turned much of this thinking on its head....
...By specializing in what you do well and honing your skills in that area. Then you trade with other people who do other stuff well. Through these transactions, over time, everyone gets richer.
In other words: Trade is not zero-sum; it’s positive-sum....
...Like an 18th-century mercantilist, Trump perceives no mutual gains from trade. In any transaction, he sees only a winner and a loser. And the winner is determined by who has the trade surplus.
...Also, like those mercantilists of yore, he conflates our balance of trade with national security, though the exact connection between the two remains a bit muddled....
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Originally Posted by Major Lambda
