Greg Mankiw stands Conservative, but rarely delves into reactionary; his equating the Pelosi measures with the Smoot-Hawley Tariff must be considered one of the reaction elements. Pelosi and Supporters wants American money to go to American labor. Greg and his Conservative friends want the cheapest materials, and the stimulus spread wherever it is most advantageous though this means underwriting foreign production. All of it remains a tornado in a Whirlpool, as the Production in Question could never equal even one percent of either GDP or Gross Government Expenditures. It is simply a Question of where formative Capital investment will be made: in an expensive, pollutant-conscious American industrial Park; or in a foul clime which sends its pollutants to the Himalayas where they can alter the Wind Currents of the entire World.
Paul Krugman expresses another Point upon the economic spectrum, one only having to downsize some of his language; I would certainly like to know what is a deflationary trap, when he has ever been in such a thing, and why it so difficult to escape one. I do know such things never occur much, and they seem to burst like Quail from a Covey, scattering in all directions. No one seems to advocate my desired option for monetary policy; namely, a "Pox on all their Houses!" Those who say I should calm down, I reply: There Once was a Time, in the heralded hedge of History, where and wence Government did not interfere in Business except to collect Taxes, and the Business did survive upon their own small pittance. Now, Governments seek to grant more in Aid than the Populace can grant as Tax, with the Government always acquiring Debt. Taxpayers cannot support their own Expenditure pattern now under current Tax, yet complete Fools feel that future Taxes can pay for their own Expenditures and Ours.
Read this Post from Mark Thoma to acquire a taste of Trade balances. Economists far too often assert an ‘All or Nothing’ element to financial discussions. How do you explain to Students the simple, yet complex, Trade notions. It must be reduced to magnitudes, I guess, and it will still seems woefully incomplete. Trade Factors: About 41% of American Trade cannot be altered–simply because We cannot produce those Materials and Goods here–about 80% of those Materials and Goods are mandatory–the American economy will start to crumple through their lack. This Trade would be maintained, even if We passed Smoot-Hawley verbatim once more. Another 30% of American Trade is annotable–which means it can be plotted on a standard economic model curve–with axis of Quantity and Tax amounts; the element here is that only extreme Tariff costs will noticeably constrict Trade quantities. The remaining Trade levels, about 30% of total Trade, should never have been produced in the first place, and production should be transferred to domestic products of greater benefit to All-foreign and domestic. Let not the Gods of War distract you, especially over a nonentity like Trade–which will never Start or Stop any economy. lgl