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PaperclipPerfector  26d ago (text post)   36906 thread views

Culture War Roundup for the week of January 27, 2025

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I want less imports.

Why?

Because when you import something, you are sending value produced inside the country, outside to country, in exchange for those goods. When you buy things produced inside the country, all the increased value stays inside the country.

Maybe some countries, due to geography or circumstance, are required to live this way. Not the USA. We can and should be wholly self-sufficient right here on this continent.

Why is China so much wealthier today than fifty years ago? Because we sent them money in exchange for value-added goods. Now they are much wealthier, and we are much poorer in real terms (gold).

Let's play a game.

  1. My wife cuts my hair. I pay her zero dollars.

  2. I go to a barber down the street. I pay him $30 for the haircut. He uses it to buy groceries.

  3. I go to the barber down the street. I pay him $30 for the haircut. He pulls out a lighter and lights the money on fire.

  4. I go to the barber down the street. I pay him $30 for the haircut. He sends $20 to his family in Thailand.

  5. I go to the barber in the next state over. I pay him $30 for the haircut.

  6. I go to a barber in Mexico. I pay him 30 pesos for a haircut.

In which of these cases is the "increased value" of the haircut staying inside the country? What is the stack rank of these possibilities?

You value a haircut.

You get a haircut from your wife. You benefit $X, the equivalent amount you would pay for a haircut.

You go to a barber, who you pay $30 for a haircut. This is you exchanging your marker of value for a service. You get a haircut and lose $30, and so your value is the same $X - $30. The barber gets $30 and spends his time, valued at $Y, and so captures value of $30 - $Y.

You get your haircut, and your barber lights the money on fire. You have the same value. Your barber still has the value, and he destroys it. This is no different than burning a house down or breaking a window. Value can easily be destroyed.

You get your haircut, and $20 goes to Thailand. Compared to the counterfactual, that $20 would have been spent on food, gas, housing, or whatever you want, but it would go to other people in your town and county and state and country. Instead that same $20 gets spent on the same things, but in Thailand. American loses $20 for nothing, Thailand gains $20 for nothing.

You go to a barber in Mexico. You pay him 30 pesos for a haircut. You gain the same $X - 30 pesos in value. The Mexican barber gets 30 pesos, and that money circulates in Mexico. The net loss for America is 30 pesos, as that's what you left in the foreign country. You're also charged a $30 tariff at the border, to discourage you from doing that again, and to make sure your local barber isn't undercut by Mexicans.

So which one is preferable? Should I get my wife to cut my hair? That way all the value stays within my household, surely that's better than the money going to some other dude. Maybe I give my wife $30 to complete the fiction.

Your barber still has the value, and he destroys it. This is no different than burning a house down or breaking a window. Value can easily be destroyed.

The barber destroys the value for himself because he can't buy anything with the $30, but this doesn't materially hurt anyone else in the same way that breaking a window or burning a house does. The $30 is removed from the money supply, decreasing the price level.

Instead that same $20 gets spent on the same things, but in Thailand.

They don't use dollars in Thailand. The recipients either don't spend the dollars, or the dollars are converted into bahts and the dollars are eventually spent on something in the US (where dollars can actually be exchanged for goods and services).

American loses $20 for nothing, Thailand gains $20 for nothing.

The barber didn't lose it for nothing, he places more value on his family having that $20 than him. He gains value by sending $20 overseas.

Is this better or worse than if the barber lights $30 on fire?

The net loss for America is 30 pesos, as that's what you left in the foreign country.

But you forget that I got a haircut, and I keep the haircut when I come back to America. At best, the net loss for America is 30 pesos minus (how much I value the haircut). Of course, I value the haircut at more than 30 pesos, because otherwise I wouldn't have gotten my hair cut - so in fact this "net loss" is a gain.

Do you think trade is zero-sum? What does "real terms (gold)" mean?

It means that currency is not wealth, and real wealth is not currency.

Trade is not zero sum, it is positive sum, or you wouldn't trade in the first place. That doesn't mean there aren't winners and losers, or that all trade is necessary. In international trade, the winners are the ones who export goods, and the losers are the ones who make things that are imported.

I am in favor of free trade, between the several states. I am opposed to trade with foreign nations due to concerns of independence and self-reliance, which I value more than simple line-go-up GDP measures. That's why selling out to China is so galling. Some people are getting rich, and they're merchants and Chinese. Some people are getting fucked, and it's American manufacturers.

Why are you in favor of free trade between states? Wouldn’t a state want to keep all the “value” inside its borders?

I suggest you read the Federalist papers, and the writings about mutual security and liberty. This is well-trod ground.

I’m not asking if it’s a good idea as a matter of public policy. Just that, as a strictly economic matter, the states would be better off if they didn’t trade with each other according to your thesis.

Well for starters, at least in theory, states states within the nation can cooperate on a deep level due to a common framework of duties and obligations. This significantly raises the probability of mutual cooperation being workable.

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