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Cafe Hayek fisks Donald Trump

Too good not to share. From the excellent Cafe Hayek blog.

Dear Mr. Trump:

You insist that we Americans are harmed whenever foreigners take actions that result in us getting more imports in exchange for our exports.  I ask that you, with your own money, prove that you really believe the economic principle that lies at the root of your insistence.

If you’re correct that people are impoverished when they pay lower prices, and are enriched when they pay higher prices, then you can easily augment your personal fortune by demanding that the suppliers from whom you purchase the steel, cement, and other materials used to construct Trump buildings raise the prices they charge you for their merchandise.  The higher they raise the prices they charge you to carry out your economic affairs, the wealthier you’ll become because you’ll be increasingly reluctant to purchase their offerings.  In the limit they can charge you prices so high that you’ll buy nothing from them!  How great would that be?!  And the possibilities don’t end there!  You can even further expand the Trump treasure by lowering the prices – even to $0 – that you charge your customers for hotel rooms and the other goods and services that you supply.

Just think of the additional wealth that will come your way by your being, as a buyer, dissuaded by high prices from purchasing goods and services from people not named ‘Donald Trump,’ and, as a seller, by the hordes of customers who will demand to consume almost limitless quantities of the wares that you make available at prices of $0.

Who knew that getting rich is so easy?!

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

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30 comments to Cafe Hayek fisks Donald Trump

  • JohnK

    I think Trump’s appeal lays in the fear that untrammelled immigration changes the character of the nation. If the USA becomes a Hispanic nation, is it still the USA? Do the people who currently constitute the polis of the USA gat a say in this? At the moment, it seems they don’t, as both Democrats and wet Republicans seem to think untrammelled immigration is a good thing in itself. Anyone who is dubious about this thesis is left to vote for Trump.

  • Pierre

    What are borders for?

  • Jerry

    I may be missing something ( nothing new there ! ) but it sounds as if the good professor has been buried in academia for far too long.

    What I don’t see is any mention of quality. Sure, we can buy almost anything from China but my experience has been that the vast majority of the products, while being cheaper, are also of a MUCH lower quality. So if you have to replace the product because of low quality ( breaks, wears out, just fails etc. ) how much have you actually saved ??

    Tools are a good example. I can buy cheap wrenches and continually replace them because of wear / breakage and end up spending FAR more than buying a high quality product once, that I will never have to replace.

    Think of product safety. Everything from elevator cables to the wheel spindles on you car ( failure of either of these will probably be fatal ). Do you REALLY want the cheapest available ! Not me.

    These are just two examples not considered in the good prfessors tunnel vision views.

  • Jordan

    My experience has been that the things I buy from China are generally fine. When it comes to more expensive stuff, if it wasn’t designed in China, then it also works fine. The iPhone is a good example of that.

    Trump’s moral panic doesn’t just apply to China though. Why would I pay the same price for a UAW shitbox that I can pay for a good reliable Honda or Toyota? Division of labor is a great thing.

  • Jane Simons

    the vast majority of the products, while being cheaper, are also of a MUCH lower quality

    Not really. I have GE, J&J, Qualcomm products that were made in China and they’re really no different to those made in USA, Europe, Korea or Japan. If you buy really cheap products from anywhere, they’ll tend to be crap, but may of the high quality good we buy are *also* made in China, often for US or European companies.

  • Julie near Chicago

    Dr. Boudreaux: “Too subtle.” 😉

    As for Chinese products, it seems (seems) to me that there’s an issue of quality control — which is why products made under the brands of foreign companies may be more reliable — and also there are issues about making things such as food that give the appearance of reality but are really fake — dumplings with macerated cardboard fillings for instance. Melamine in human and pet food. So forth. Products made entirely in Japan or Hong Kong seem fine, but the Japanese at least have had problems with food items they make with some ingredients from China; I think that may be true of Hong Kong as well. Unfortunately, some of those tainted Japanese products have made it to the international market….

    There are other issues with buying stuff from China, of course. For instance: What about the Lenovo problems with malware or adware, some of which I’ve recently read purports to be “undeletable”? Then there are political problems of various sorts.

    Anyway, I already said what I think of The Trumpster. My opinion hasn’t changed lately.

  • Julie near Chicago

    On the other side of Dr. Boudreaux’s argument, there’s the fact that cheap foreign labor (whether the laborer is here legally or illegally, or in China or some other low-wage spot) does displace individual people. In the long run we may “all be better off” (but in fact in no long run that I ever heard is each individual “better off,” which is why Utilitarians stick in the “…of the greatest number” qualifier), but individuals may be much worse of for an appreciable period of time while things sort themselves out. Perhaps people remember the situation in the 70’s (I think it was) when our economy was so rotten that well-established engineers who had had good careers were “let go” and ended up driving taxicabs to keep bread on the table. But at least the lucky ones still had some sort of job.

    Our economy right now is obviously not healthy enough to absorb displaced workers easily. (We all know the underlying reason why.) So people, seeing this, blame cheap (foreign) labor for the state of affairs, and they don’t quite get that it’s that cheap labor that makes a good many of their purchases affordable to them at all.

    It’s not as if that fact is regularly pointed out in the news and entertainment media.

    It doesn’t have to be furriners, by the way. When the costs of doing business in Ohio became more than human companies could bear, they withdrew to Texas, and Ohioans felt cheated. (At least by some accounts). Perhaps The Government Should Do Something.

    My former home is in a sort of upper-working-class/lower-middle-management 70’s, formerly-rural subdivision, houses medium-sized as opposed to McMansions but on quarter-acre or larger lots, good place for kids and old enough to have mature trees and whatnot. Typical suburbia, of the pleasant-but-not-ostentatious sort. Lady across the street, widowed, finally decided to sell her house and pursue warmth and possibly her married daughter. Housing market was down, plenty of older houses for sale, and she got tired of waiting for it to rebound to its previously ridiculously high levels, so she sold it “at fire-sale prices,” I was told by a reasonably sensible neighbor, who added that “the neighbors were sort of upset with Barb, because the sale did lower the property values here.”

    A variant of the same syndrome. People is people, economics or no. Insofar as underselling the competition (which is what it comes to) is concerned, people overlook that even a few such undersellings will lower the county’s assessed value of their houses, which means lower property tax. Gee, never thought of that!

    As a matter of fact people don’t like “price-gouging,” which they see as taking unfair advantage of other people’s misfortune, and they don’t like underselling either (except insofar as they’re the customer) because it constitutes “unfair competition.”

    Some businessmen and entrepreneurs find ways to overcome these difficulties by changing their pricing or some other business methods.

    Some overcome difficulties by getting The Gov to barge in with guns or at least seizure documents (if any) at the ready. And telling the townsmen that they deserve better than the dump currently on site X, and besides look at all the hot new taxes they’ll collect.

    Guess which way the Trumpster does things.

  • Jacob

    If someone doesn’t like Chinese products. or thinks they are of inferior quality, he is free not to buy them. But he should not impose his preferences, by force (of law) on other people and deny them the right to buy what they think is best for them. That Chinese products may be inferior is not reason to ban them.

    Immigration poses a big dilemma for libertarians. We are for free movement of people, so it’s difficult to justify anti-immigration policies on libertarian principles. The immigrants also work, perform necessary and important tasks (most nurses, for example, and many doctors are immigrants).

    Maybe the Republican-base voters hate immigration, but then, they are not libertarian.

  • Immigration poses a big dilemma for libertarians

    Not really 😉

  • Nicholas (Participist) Gray

    I wonder how The Don will Trump that?

  • Julie near Chicago

    I don’t think that “Republican-base voters” in the large particularly hate or even dislike immigration. Usually what they hate is illegal immigration, particularly when the illegals get the bennies and behave like trash — for instance squatters, in both senses of the word I’m sorry to say. Or the folks who like to go armed onto U.S. ranchers’ property and start cutting up rough and in some cases committing murder. Or committing rape. There is the foreigners-taking-our-jobs issue, but the truth is I don’t see much along those lines on the Conservative Internet, which is where I surf and sometimes even read, when not ranting on some Anglophonic libertarian board or other.

    There is an argument in favor of limiting immigration, as by quota, but it’s usually based on the argument that a society can only assimilate X% of foreigners at a time before the foreign cultures overwhelm ours — perhaps depending on the foreign culture in question. I don’t suppose anyone would much oppose accepting more Brits or Germans or Japanese, but Muslims are another matter altogether. There in the eyes of many common sense dictates caution if not outright rejection, and I think it’s quite true that those who vote Republican are inclined to caution.

  • Julie near Chicago

    Nicholas, you’re doing it again! *g*

  • The Wobbly Guy

    Tired of the lack of vibrancy in your neighborhood? Economy in a slump? Like to grow the GDP? Ask your representative about OpenBorders. OpenBorders is the solution recommended by the Chambers of Commerce, the Wall Street Journal, war hero John McCain, the Democratic Party, the entire mainstream media, the Catholic Church, and every billionaire except Donald Trump.

    [FAST VOICEOVER] Be sure to consult Ann Coulter, Steve Sailer, and VDare-dot-com before voting for OpenBorders. OpenBorders has been known to cause social fragmentation and lower PISA scores. OpenBorders also contributes to graffiti, littering, high unemployment, teenaged pregnancy, lack of academic achievement, increased crime, loud annoying music, and spread of hitherto-unknown diseases. Open Borders has also been shown to increase likelihood of domestic terrorism. OpenBorders accelerates depletion of limited resources. Open Borders has been shown to increase strain of the social safety net, occasionally resulting in municipal and state bankruptcy. Other known side effects include increased irritability, fatigue, and inability to communicate with your fellow citizens. Contact your representative if your high unemployment lasts more than seven years. He will instruct you to seek job retraining.[END FAST VOICEOVER]

    Ask your representative if OpenBorders is right for you!

  • Trump is a breath of fresh air for politics.

    An idiot with no coherent policy.

  • Chinese wrench sets:

    I have quite a few. The quality is lower. But more than adequate for occasional light duty.

    And if you have kids they are good starter sets. If the kids are not interested – no great loss.

    Same for Chinese voltmeters. One year for the holidays all the kids (4) got Chinese wrench sets. Another year – voltmeters.

  • Julie near Chicago
    August 19, 2015 at 9:33 pm

    Well you know how they work it in the small town you live in. When property values go down property taxes go up. We (I live there too) have the cleverest politicians in America. And the highest (or nearly so) property taxes in America.

  • Mr Black

    Policy pundits completely miss the point of Trump. Yes, there are elements of his policies that resonate with people even if they are contradictory but his main appeal is in looking the establishment in the face and telling them to go f*ck themselves. THAT is what people are liking. They really don’t care if he’s a democrat or his policies are like to those of the democrats, if he’s an American first, he’d be a better president for America than any democrat and most GOP candidates.

    Many GOP supports actively hope he destroys the GOP. They want him to demolish the existing leadership and power structures of the party so that something more genuine may take its place. He is an instrument of destruction and war, imperfect certainly, but the only one on offer at the moment.

    Trying to argue policy in regards to his candidacy is missing the whole point. He’s not a policy wonk and people don’t care if he makes no sense. They care that he OPENLY fights their enemies, the establishment.

  • Julie near Chicago

    MSimon, yes, I know you are within hailing distance, although I’m unclear about which direction to holler in.

    But you know, my comment was prompted by these events:

    Last summer I bought this house, direct from owner, no realtor involved, never listed. The owner took a haircut to the tune of around $ 40,000. I applied to have our property tax lowered, because the the assessment at the time was based on the $ 160,000 (IIRC) the seller had paid for it. The County told me no dice, as the property “was never exposed to the market.” Well, I could hardly prove otherwise, since in fact it wasn’t exposed, except of course to us. So this year we ponied up the required amount.

    In the meantime, several houses in the near area have been up for sale, some indeed from last year. The triennial reassessment notices went out from the County just a couple of weeks ago; I assume you got one also. Lo & behold, our assessment has gone down by some $ 40,000, which I assume is because the similar houses sold for lower than their previous assessments would warrant. I admit I leapt to a conclusion based on that, namely, that our property tax will also be less next year, but it seemed at least a reasonable leap. Still, I have to admit that my comment was made in part based on a conjecture that seemed consistent with common sense. You’d think by now I’d know better. :>(

    Besides, the lawyer ASSURED me that Rockford/Winnebago County property taxes would be less than unincorporated-Naperville/Will County taxes. He PROMISED. 🙂 !!

    PS. An accurate and pithy comment on Mr. Trump. Somewhat snide and very good. :>)))

  • J.M. Heinrichs

    Sholokhov was not correct when he wrote “Quiet Flows The Don”?

    Cheers

  • Julie near Chicago

    Omigod, now J.M. is doing it. Have a heart, you guys! You’re getting me in stitches! 😉

  • Nicholas (Participist) Gray

    J.M., I’m not sure Russians understand irony. This was more likely to be a wish, so far unanswered.
    Maybe we should let the puns die down- the cost of medical care might make those some expensive stitches!

  • Jacob

    “An idiot with no coherent policy.”

    That is “a breath of fresh air” ??? No. it is business as usual.

  • Jacob

    Julie,
    Is the crime rate among immigrants (legal or not) higher than among American born citizens? I don’t think so. The anecdotal evidence is dubious.

  • On the subject of “crap from China anecdotes”. I am a serial Thinkpad/Ideapad user as is my wife. These are their fates…

    1. (Mine) IBM Thinkpad R40. Died. Put in a reasonable stint but died.
    2. (Hers) Lenovo S205. Drowned. Absolutely inundated by a flood.
    3. (Hers) Lenovo E335. Still truckin’
    4. (Mine) Lenovo S440. I’m typing this on it.
    5. (Hers) Lenovo Ideapad Flex 10. New-ish No probs yet.

    If you ask me. If you buy from a major Chinese brand (such as Lenovo) then OK. From smaller outfits (this includes Taiwan – I am an IT tech – buy a lot) the big problem is support and translation which rarely rises above the “All your bases are belong to us!”. Usually worse. It’s like doing a cryptic crossword at times. It’s quite fun unless you have a tight deadline. It’s all of the, “My mate’s nephew girlfriend’ auntie once had a holiday in NYC and can order a burger and fries in Engrish – she’ll do it, cheap”. Well bully for her but doesn’t help me whilst crawling under desks eating dust bunnies does it. One of the reasons for the Kindle I recently bought. I have a compact reference tool.

    My wife is a translator BTW. Russian, Danish, Norwegian, Swedish -> English.

  • JohnK

    I don’t suppose anyone would much oppose accepting more Brits or Germans or Japanese, but Muslims are another matter altogether. There in the eyes of many common sense dictates caution if not outright rejection, and I think it’s quite true that those who vote Republican are inclined to caution.

    Julie:

    The problem is that Edward Kennedy made sure that you will not be accepting many Brits, Germans or Swedes with his 1965 Immigration Act. There is a reason that millions of Indians and Nigerians are now US citizens, and it’s largely down to an alcoholic coward who left a girl to die.

    Of course, in 1965 the Act was presented as a piece of legislation which would just tidy up immigration a bit, nothing to see here etc, but then again we Brits were told that joining the EEC would entail no essential loss of sovereignty. Is it possible we have been lied to?

  • PeterT

    If it is any consolation to Americans I would be happy to swap ‘our’ current wave of immigrants to yours. (And for once, by ‘our’ I mean Europe’s). At least on a person for person basis.

    I think the solution to the immigration crisis could in part be to award guest worker status to immigrants, with no path to citizenship for themselves or their children, possibly even with a requirement that they return to their country of origin for a year out of three (or something), assuming that that country is peaceful. But this depends on them being able to work – this is only possible in the UK and the US. France, Sweden etc aren’t even able to keep their own people employed due to restrictive labour markets. Locking immigrants out also works but there is obviously a huge human cost.

    I am not convinced that Trump would make an awful president. Pretty hard to beat ‘worst president evah! TM’ Obama. That said, if he did act on his views on trade I would feel daft having voted for him, if I had the opportunity to do so and did so.

    Paul will never win the GOP nomination so Cruz it is. Walker is merely a maybe – nobody else (except perhaps Carson) are any good.

  • If it is any consolation to Americans I would be happy to swap ‘our’ current wave of immigrants to yours

    Personally I am delighted by the large wave of Polish immigrants into the UK.

  • JohnK

    Well they are not really the problem here are they Perry? Very often people (and politicians if you count them as people) will mention Poles because they do not want to seem racist by mentioning a certain alien culture which enriches us through suicide bombing, beheading, female genital mutilation, honour killing, heroin trafficking, mass child rape, electoral fraud, insurance fraud, immigration fraud etc. etc. etc. ad nauseam.

  • PersonFromPorlock

    Trump is a cudgel to beat the Establishment down with. It doesn’t matter what his policies are – they could even be the same ones the Establishment has – so long as the power to control events is taken out of their hands. Later, absent Establishment domination of the electoral process, we can run small-government types with some hope of success.

    And who knows? Maybe Trump has had a ‘Road to Damascus’ moment.

  • PeterT

    Johnk. Yes it was those who must not be named I had in mind. Fit polish blondes, yes please come as long as you dont vote labour.