Don Boudreaux destroys ‘Trumpkins’ on taxes, regulations and trade deficit

The Wall Street Journal published an op-ed entitled “A Vote for Trump Is a Vote for Growth.” The writer claims Donald Trump will create 25 million new jobs, boost incomes and create trillions of dollars in tax revenues. Wow! He sounds like an omnipotent being with vast knowledge.

But Donald J. Boudreaux, Professor of Economics and Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center, disagrees with this sentiment.

According to Boudreaux, Trump will actually raise taxes and create more regulations and is rather confused when it comes to trade.

Here is what he writes at Cafe Hayek:

Cut taxes?  Bunk.  Trump famously promises to raise taxes on Americans who buy imports.  Reduce regulation?  Rubbish.  Trump promises more government intrusions into Americans’ commerce with foreigners.

As for ‘eliminating’ our trade deficit, Trump might indeed succeed on that front.  But such ‘success’ would be regrettable, for it would be the inevitable outcome of the American economy being made an unattractive destination for investment.  (Ross and Navarro seem to be unaware that to “eliminate our trade deficit” – such as was done, for example, during the Great Depression – is to eliminate net contributions by foreigners to increasing the size of America’s capital stock.)

But Trump’s most absurd promise is to enrich Americans by increasing exports and reducing imports.  Imports are what we voluntarily buy and exports are the price we pay.  Therefore, a policy meant to increase exports while decreasing imports is a policy meant to force Americans to pay more to foreigners and to receive less in return – a decidedly unartful deal the architect of which would deserved to be fired.

But the Trump camp’s confusion runs even more deeply.  Exporting for Americans is worthwhile only because it supplies us with the means to purchase imports, either currently or in the future.  So a policy that aims both to increase exports and to decrease imports is akin to a policy that aims both to increase people’s spending power and to decrease it.  It’s a policy meant to give Americans greater means for acquiring imports as it simultaneously strips Americans of the freedom to use those means.  It’s the economic policy equivalent of an attempt to square a circle.

For the most part, Trump supporters seem to be anti-politician and anti-government, which is always a good thing. But then they fall into the political trap of finding a savior. So why are they being scammed that one person in government will accomplish all of these unlikely promises? It’s akin to graft queen Hillary Clinton and her supporters who believe in all of this free stuff that she will give them. You should never fall for a politician’s grandiose talk.

Remember what Friedrich Hayek wrote:

It is in connection with the deliberate effort of the skillful demagogue to weld together a closely coherent and homogeneous body of supporters that the third and perhaps most important negative element of selection enters. It seems to be almost a law of human nature that it is easier for people to agree on a negative program—on the hatred of an enemy, on the envy of those better off— than on any positive task. The contrast between the “we” and the “they,” the common fight against those outside the group, seems to be an essential ingredient in any creed which will solidly knit together a group for common action. It is consequently always employed by those who seek, not merely support of a policy, but the unreserved allegiance of huge masses. From their point of view it has the great advantage of leaving them greater freedom of action than almost any positive program. The enemy, whether be internal, like the “Jew” or the “kulak,” or external, seems to be an indispensable requisite in the armory of a totalitarian leader. That in Germany it was the Jew who became the enemy until his place was taken by the “plutocracies” was no less a result of the anticapitalist resentment on which the whole movement was based than the selection of the kulak in Russia. In Germany and Austria the Jew had come to be regarded as the representative of capitalism because a traditional dislike of large classes of the population for commercial pursuits had left these more readily accessible to a group that was practically excluded from the more highly esteemed occupations. It is the old story of the alien race’s being admitted only to the less respected trades and then being hated still more for practicing them.