Wednesday, June 19, 2019

on trade deficits...

The trade deficit is in one category, goods and services. The other major category in this realm-- the "balance of payments"-- is investment. So, our trade deficit is mostly (or more than) offset by an investment surplus. So, if one complains about the TD, they're also complaining about the IS for some reason.

The trade deficit is an aggregate measure of voluntary mutually beneficial trades that happen to be across national/political boundaries. If the trade deficit is really a problem, we should punish individuals who chiefly contribute to it-- people who work for companies that don't export anything.

The trade deficit is a useful angle for those who seek national solutions-- e.g., restricting competition by reducing intl trade-- but it's not at all clear how the aggregate measure is useful in understanding (or denigrating) a bunch of mutually beneficial activities.

Now all this said, there can be reasons to be worried about intl trade or to invoke sanctions. But not trade deficits.

Tuesday, June 4, 2019

Left/Right assumptions about statics vs. dynamics in human behavior in response to incentives

This article on abortion got me thinking about a broader point: I'm not sure they're consistent with it, but one big difference between the Left and the Right seems to be in their assumptions about responses to incentives. The Right often imagines a larger impact on behavior than those on the Left. Or putting it in more philosophical terms, the Left is more deterministic.

So, for example, those on the Left are less worried about profligate welfare policy, because they don't picture big changes in family structure and stability, kids born out of wedlock, individual and cultural changes. Likewise, they were apoplectic and apocalyptic about welfare cuts in the 1990s, since they thought that people would be largely static in their "response".

On abortion, I think many of them are concerned about a tremendous increase in coat hangers and back alleys. But this misses the dynamics of human behavior: people adjust. I don't know how to bridge this gap, but hopefully, we can understand them better.