Friday, April 04, 2014

Putting The Neo Into Neo-Mercantilist

There is an enormous difference between

(a) the US should spend billions (as it has) to achieve energy independence as an end in itself, and
(b) the US should develop resources, if they are cheap and don't produce too many externalities, and have energy independence be a (mildly happy) consequence.

  This author doesn't really see that distinction, it appears. 

There is just no reason why anyone should strive for independence, if that requires this kind of neo-mercantilist nonsense.

Don't get me wrong:  it would be great to have a significant new industry in the U.S., and a decline in the price of energy.  All good for growth.  But not because having a trade deficit has been "sucking the blood out" of our economy.

4 comments:

Mitus Mita said...

This article is mind blowing. When I read this article, I enjoyed.

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Tom said...

Trade deficit equals investment surplus. Thus, making America a poor place to invest will, indeed, achieve the mercantilist's ends.

From the article: "a persistent trade deficit can act as a drag on economic growth, manufacturing and employment." Allow me to translate: "a persistent investment surplus can act as a drag on economic growth, manufacturing and employment." Well, if their investing government, it might.

OregonGuy said...

Just load the ships (then sink them when they go over the horizon.)
.

Anonymous said...

Other than the defense cost which will be associated with imports of energy (as Europe is now seeing with Russia), trade works great in energy.
We export natural gas to Mexico which they use to generate power. It is cheaper and cleaner than the oil they used. Mexico now has more oil to export to US which we use to power cars.
We export light sweet oil to other countries, as most shale oil is light sweet, and their simple refineries can only process light sweet oil. We then import heavy oil at a lower price because we have some of only refineries that can process heavy oil (and natural gas is used to produce energy to refine oil, and given our cheaper natural gas our refineries can process heavy crude cheaper.
Free trade is wonderful.