I know little about the minutiae of Trade, but I do know that the United States will never export their way out of our financial difficulties. The NYTimes reports that the Trade imbalance is shrinking, though Business Week reports the non-oil Trade deficit widened in August. The fact outstanding in the data consists of a lack of Manufacturing capacity in the United States, which is a factor that must not continue for any length of time. The lessening of the value of the Dollar is not the method to curtail American dependence on foreign products. I think the economic community may be witnessing the horrors of elimination of tariffs.
I cannot decide whether I believe in the toxicity of Nobel Prize awards, yet it simply reflects common desires to honor Those who advocate what the majority wants to do anyway. Hayek himself failed to outline the hazards and limitations of Information, all of which in one way or another is Gated. That Gating process always has a model signature, eliminating real comparison value. Pablio Triana may have the right idea, but it is only a theory after all. I would not crucify individuals, models, and fancy words solely because some unknown quantity known as economic participants did not respond in the manner proscribed. One has to forgive the Fool for his sins, and Economists work with gross totals.
I would be the last to call Tyler Cowen’s logic faulty, though I see some potential holes in it. Unless the Stimulus had created a series of new Jobs, the length of unemployment will not change in either scenario, no matter the length of actual unemployment. This is because in either case there has been no Job Creation, only Job prolongation. Unemployment insists that there is more than one Candidate for any specific Job, and the conquest on the Job by one Candidate means continuing unemployment for the losers. Stimulus without Job Creation only delays the day of reckoning. Recalculation seemingly always must include increases in efficiency, and I wonder How such efficiency can possibly result in Job Creation, without a profound increase in Productivity. The later will not occur without an increase in Demand; yet it is the loss of Demand which has called forth the Recalculation. I speak perhaps little Truth, but am great about presenting facts which are hopefully true. I do not find Recalculation a panacea for our troubles. lgl