Comment by MaskedMan
1 year ago
The narrative that we're getting 'ripped off on trade' is a myth. In the real world, when someone says "I got ripped off" it means they were overcharged for something. In politics, getting 'ripped off on trade' means we're being undercharged by foreign countries, which is apparently less desirable than being overcharged by Americans. Seems like the only trade here is a fake rip-off for a real one.
I wonder how people would respond to a survey that asked: "Would you support policies that aim to increase foreign drug imports to bring down pharmaceutical prices?" and a follow-up: "If yes, what about lumber, steel, etc?" My guess is that many would say yes to question 1, but not apply the same logic to other goods.
Propaganda is very effective when there's some kernel of truth behind it.
For this trade deficit question the important context is that some trade partners artificially devalue their currency (relative to the USD) to maintain strong export advantage (which therefore directly disadvantages their own people, since their wages are worth less on the global market, ie. when they are importing they have to pay more, when they are going on a vacation abroad they have to pay more, and this is a large chunk of the "missing trade" (the trade deficit), which translates to missing demand for US exporting sectors.
The other important piece of the puzzle is that US residents are also negatively affected by one distinct factor, which is the resource curse of the dollar's reserve currency status. Because due to the exorbitant privilege[1] (of the USD being the de facto global reserve currency) the financial sector is at an advantage compared to other sectors, and it slowly crowds out other economic activity.[2]
[1] https://en.wikipedia.org/wiki/Exorbitant_privilege
[2] https://www.phenomenalworld.org/analysis/the-class-politics-...