True Believers

Mr. Trump holds forth on how he interacts with other heads-of-state (from TIME):

And by the way, Canada? They negotiate tougher than Mexico. Trudeau came to see me, he’s a good man, he said we have no trade deficit with you, we have none. Donald, please. Nice guy, good looking guy. Comes in. Donald we have no trade deficit. He’s very tough. Everyone else, getting killed or whatever. But he’s tough. I said, well Justin, you do. I didn’t even know. Josh, I had no idea. I just said you’re wrong. You’re wrong. It was so stupid. [LAUGHTER]. I thought it was fine. I said, you’re wrong Justin. He said, nope we have no trade deficit. I said, well in that case I feel differently. I said but I don’t believe it. I sent one of our guys out. His guy, my guy. They said check because I can’t believe it. Well, sir you’re actually right, we have no deficit but that doesn’t include energy and timber. [LAUGHTER]. Well you don’t have timber, and when you do we’ll lost $17 billion. It’s incredible.

USTR notes that the 2016 bilateral trade balance between the US and Canada is +12.9 billion.

And yet there are still people (such as Rick Stryker) who will write:

I believe that Trump is the most honest politician we’ve seen or probably will see in our lifetime.

For this portion of the population, facts will remain irrelevant.

98 thoughts on “True Believers

  1. Moses Herzog

    I think in America, for a a long time we have thought ourselves “different” than other nations. “Different” always translated as “better”. And in some aspects we are. We’ve done pretty well with democracy and capitalism. And we often hear the insults to Germany. And maybe I’m biased ‘cuz I have some German blood. I feel a lot of shame about what Germany did as someone with German blood. Even though the German part of my family immigrated to America long before World War 2. To commit probably the worst crime in human history, against what many people consider, (and I consider) God’s Chosen People. I think it indeed does show a kind of “darkness” Germans have in their character (again I am saying this as someone with s significant amount of German blood).

    But I also think there is a kind of arrogance or false sense of “self-assuredness” (for want of a better descriptor) of people of many nations that “What happened in Germany can’t happen with our nation, it can’t happen to us“. But what do we have with Trump as it relates to Hitler?? A man (or immoral creature??) who can say ANYTHING and have 85% of Senate and House Republicans happily sign off on it, shrug their shoulders at it, and put up no resistance, no barrier, not even the smallest of speedbumps. And a significant portion of the American populace (35%–40%??) that wholeheartedly buys anything the VSG has to say.


    1. ilsm

      Interesting the German thing and inference to Hitler.

      In the past day or so Mohamed bin Salman, slaughterer of Yemeni children using US weapons and combat support assets, compared the leaders of Iran to hitler.

      Sort of like the war mongers selling breaking up Serbia in 1995 compared Milosevic to Hitler………

      The shame of Hitler is he is used as excuse for Saudi’s [US] lapdog to break up countries today.

      While the neocon use coddling fascists as an assault on leftists who insist the US is a war mongering dog.

  2. Not Trampis

    Of course he is a bald faced liar. He was/is a real estate developer . It goes with the territory just like not believing in competitive markets. The main question is does he lie out of profound ignorance or not. I suspect it is the former as his knowledge of most subjects is very poor. We know all this from when he was trying to the the republican nominee and then again during the Presidential campaign. no man has been caught out lying during a campaign or being a President.

    1. tew

      Trump lies sometimes. Sometimes he says things based on actively cultivated ignorance. Other times he is practicing B~||s#it. The three are different. The latter is also in the title of a book on the subject:

      Lies are deliberate misrepresentations that are known to the liar to be false. They liar knows s/he is not telling the truth.
      Statements from cultivated ignorance are things the person wants to “know” to be true and so s/he avoids knowing more and advocates for the ignorance.
      B~||s#it isn’t concerned with the distinction between true and false. It is glib, incurious, and unconcerned with matters of fact.

      1. JBH

        Quite an interesting book. But far, far more interesting is that no great book on Truth has ever been written! In particular, there’s no comprehensive scientific methodology which ordinary people can use to verify the truth content of complex matters. Especially matters of history including all the important events (WWI, WWII, assassination of JFK, 911) which without question have not been random.

        1. macroduck

          Actually, Frankfurt wrote a book “On Truth” upon realizing he had relied on the idea of truth in his “On Bullshit” without offering a definition.

  3. pgl

    Note this detail – “Services exports were $54.2 billion; services imports were $ 26.9 billion. The U.S. services trade surplus with Canada was $24.6 billion in 2016.”

    If we exclude services as Trump often likes to – our exports of goods to Canada turn out to be less than our imports to Canada. Census reports the 2017 for exports of goods to Canada ($288 billion) v. imports of goods to Canada (almost $300 billion).

    Now I happen to think we should include both goods and services but we know what Trump likes to believe and report.

  4. pgl

    “Well, sir you’re actually right, we have no deficit but that doesn’t include energy and timber. [LAUGHTER]. Well you don’t have timber, and when you do we’ll lost $17 billion. It’s incredible.”

    My God – Trump is really stupid and people laugh it off? I do not grow fruits and vegetables but since I try to eat healthy, I buy a lot of them from my grocery store. To say I “lost” a lot of money to them is beyond stupid. No I earn my income another way and my firm I guess has lost money to me even if they profit quite well from my services. Jeffrey Sachs had a great line on Trump’s utter stupidity the other day – something I featured over at Econospeak.

  5. ilsm

    This statement applies to broader “groups” than deplorables.

    “For this portion of the population, facts will remain irrelevant.”

    As my “don’t tread on me” neighbor said: “democrats always lie”.

  6. CoRev

    Menzie, what was your point in this article i see a shot at Rick S, that you actually showed the truth of Rick’s assessment: “I believe that Trump is the most honest politician we’ve seen or probably will see in our lifetime.” vs your reference: “….I said, you’re wrong Justin. He said, nope we have no trade deficit. I said, well in that case I feel differently. I said but I don’t believe it. I sent one of our guys out. His guy, my guy. They said check because I can’t believe it. Well, sir you’re actually right, we have no deficit but that doesn’t include energy and timber. [LAUGHTER]. Well you don’t have timber, and when you do we’ll lost $17 billion. It’s incredible.”

    I dunno, but admitting when one may be wrong, and then seeking a more accurate answer is a sign of seeking the truth.

    So who was more accurate, Trump vs Trudeau? The US Census tell us this: “TOTAL 2017 282,392.0 299,975.2 -17,583.2”

    Is your TDS getting the better of you?

    1. Menzie Chinn Post author

      CoRev: Sure. I think we should start reporting total GDP including only goods, too. That’d be just dandy…We can call that “CoRev GDP”.

      1. pgl

        Wait a second. I earn a good living as a consultant aka “services”. Now that this does not count – I’m filing for government assistance as I live way below the poverty line. I’m sure CoRev will not mind paying taxes to support me!

        Of course as a consultant, I tell my clients the truth which I guess is why Trump is not offering me a position in the White House. Not that I would ever take one when he runs the place.

      2. CoRev

        Menzie, “CoRev GDP” is based upon 2017 estimates, while your USTR estimates was for 2016. I’m still searching (not too hard now) for the 2017 services estimates for Canada. Instead of calling out others for incomplete comparisons, Y’all (Pgl, 2slugs, & Menzie…) should be just as careful to assure your comparing the same periods. I suspect the two representatives from the Canadian and US administrations knew where to look for the most current numbers.

        My main point was: “I dunno, but admitting when one may be wrong, and then seeking a more accurate answer is a sign of seeking the truth.” as opposed to Menzie’s implication that Trump :lied and Rick was too (you fill in your favorite) to understand

        And yet as Menzie opines “For this portion of the population, facts will remain irrelevant.”, just as Y’all comparing two different periods/years must surely be relevant.

        The TDS is growing stronger each day.

        1. Menzie Chinn Post author

          CoRev: Typically, in my blogposts (which should be subject to a level of factchecking a little below a Presidential pronouncement, in my opinion), I try to present the *actual* statistic of interest for the latest available year, and not a *related* statistic for a more recently available year.

          In my book, a “trade balance” is a balance in trade in goods and services. a “merchandise trade balance” is a trade balance in goods. I don’t think that is being too persnickety.

          1. pgl

            But Menzie – remember who is Trump’s chief economic advisers. Something tells me that they do not get these distinctions and even if they did – they have a poor record of being honest with their clients.

          2. CoRev

            Menzie, unless you want me to go all RTD on your disingenuousness, admit there is a difference in the years compared. You do admit there is a YoY difference in balances.

          3. Menzie Chinn Post author

            CoRev: I have read and re-read your statement. I cannot understand what you mean. And I particularly do not understand the reference on YoY differences in balances. All I did was repeat an annual figure for 2016 total trade balance, and state that this was different than a 2017 annual merchandise trade balance. I made no reference to year-on-year changes. Do you understand what YoY means?

          4. rtd

            If you feel that you “should be subject to a level of factchecking a little below a Presidential pronouncement”, I guess that explains why you’re not interested in full disclosure of data/analysis because Trump isn’t interested in full disclosure of his finances? I disagree though. While POTUS shouldn’t be lying about this and similar issues (and he certainly shouldn’t be bragging about lying), I feel when it comes to data and analysis, particularly related to economics, you should be subject to a higher level of fact-checking than that of POTUS. This is why I’ve asked on various posts for you to provide your eviews workfiles yet you have repeatedly ignored these requests. Akin to how I feel about POTUS refusing to release his taxes, I believe that there is a reason for you to ignore these requests. As I’ve said before, despite the seemingly high level of disdain that you have for your president, the two of you share an (un)impressive number of traits.

          5. CoRev

            Menzie, and there you like pgl prefer to deflect than address the point. RTD’s point was publish, not delete. To often you go to your library of old comments to which you disagree to try to make a point. Your disagreement does not make you correct. Often your misunderstanding of the original comment carries over to your later attempt. As shown here.

          6. baffling

            “I feel when it comes to data and analysis, particularly related to economics, you should be subject to a higher level of fact-checking than that of POTUS. ”
            rtd, are you serious. this falls within a similar category as rick stryker permitting trump to lie, as long as it allows him to achieve his goals. a lack of integrity i guess. or apparently very low expectations of potus.

          7. rtd

            I am certainly not “permitting trump to lie, as long as it allows him to achieve his goals” and if you would have included a complete version of my sentence, you should have know that. Here it is in its entirety:
            “While POTUS shouldn’t be lying about this and similar issues (and he certainly shouldn’t be bragging about lying), I feel when it comes to data and analysis, particularly related to economics, you should be subject to a higher level of fact-checking than that of POTUS. ”
            And, yes, I do have “very low expectations of potus” but that isn’t the issue as I absolutely feel Menzie should be held to a higher level of trustworthiness for data and economic-related work than any POTUS, including James Buchanan. Just like a judge should be held to a higher level for areas of law expertise, and Amy generals to a higher level for war strategy, etc… and all this DESPITE Menzie’s partisan and subjective blogging.

          8. baffling

            “And, yes, I do have “very low expectations of potus” but that isn’t the issue as I absolutely feel Menzie should be held to a higher level of trustworthiness for data and economic-related work than any POTUS, including James Buchanan. ”

            rtd, again, WOW. is there any area where you would hold high expectations for potus? he is the leader of the free world by the way. or let me rephrase this. do you have very low expectations of potus, or trump? my guess is you had higher expectations of obama. and if that is so, your statement “and all this DESPITE Menzie’s partisan and subjective blogging.” would be rather hypocritical, don’t you think?

    2. 2slugbaits

      CoRev Just in case you didn’t understand Menzie’s reply, I’ll make this very simple. The trade balance shown in your link is the trade balance for goods only. The total trade balance includes both goods and services, and that shows a surplus.

      1. pgl

        Well noted. CoRev should follow the product detail by country that Census provides. If he did and if he bothered to read Trump’s other ramblings, it would show him that Trump is clearly the dumbest person ever advised by the 3 stooges (Kudlow, Ross, and Navarro) who all lie routinely.

    3. pgl

      A little clarification here:

      The $17 billion figure was our GOODS trade deficit for 2017. Whoever gave Trump that number deliberately excluded our larger SERVICES trade surplus. Follow the various links in the TIMES story and you will see Trump suggesting that these figures exclude Canada’s export of energy products. But that clearly is not the case as the Census data I linked to does include energy product exports and imports.

      Trump may be the dumbest person on the planet. So who does he hire to give him economic advice – the 3 stooges: Navarro, Ross, and Kudlow. And Lord knows all three of these clowns lie a lot.

  7. 2slugbaits

    It’s too bad that Bruce Mazlish died a few weeks after the 2016 election. He would have had a field day writing Trump’s psycho-history. For those of you who never read any of Mazlish’s books, I recommend Google.

    In a strange way Trump has a way of being “honest”…after a fashion. For example, he told us that his base would be with him even if he shot someone in broad daylight in the middle of 5th Avenue. That was both truthful and cynical. Another example is the way Trump uses what psychologists call “projection” to challenge is rivals. It’s an interesting way of letting us know that he more often than not is actually talking about himself. Or when he would call into a NYC radio show using an alias and then trash talk Donald Trump. And I’ve always wondered if it wasn’t Donald Trump himself who released that partial tax return. Trump lies…a lot. But he usually signals to us that he’s lying. Sometimes the signals are subtle. Sometimes, as in the Justin Trudeau case, his signals are blindingly obvious. So is it a lie in the usual sense if someone tells you that what they just told you was a lie??? What’s really sad is that his base, which tends to be intellectually incurious, can’t tell that Trump is lying. So he probably could shoot someone on 5th Avenue and they’d believe it Fox & Friends said he didn’t do it.

  8. Ed Hanson.

    From Slug

    “The trade balance shown in your link is the trade balance for goods only.”

    Good point and leading to some questions, are services subject to tariff, if so how is it collected, and how effective is it collected?


    1. pgl

      My understanding is that we do not have tariffs on imported goods from Canada at the moment but that could change. Could a nation place duties on cross border services? I’m sure they could if they wanted to.

      1. CoRev

        Pgl wrong again. I believe Trump imposed a tariff on Canadian, lumber which is why it was a subject of the discussions.

          1. pgl

            “The tariff averages 20.83 percent on Canadian lumber imports, which are used mostly for home building in the United States. U.S. home builders disagree with the lumber industry over the softwood issue and have called the duties “a protectionist measure designed to safeguard the interests of major domestic lumber producers at the expense of American consumers.” The National Association of Home Builders estimates that the tariffs will increase the price of an average single-family home built in 2018 by $1,360.”

            I can see Wilbur Ross arguing that higher lumber prices do not raise the price of houses made out of aluminum siding very much. Oh wait – we slapped 10% tariffs on imported aluminum. Maybe we should make houses out of steel instead!

          2. CoRev

            Pgl, “My understanding is that we do not have tariffs on imported goods from Canada at the moment but that could change” but when called on his error, he actually searches to find: “The tariff averages 20.83 percent on Canadian lumber imports,…” So what would a honest person do?

            And what did pgl do? He conveniently forgets the error issue and deflects to a Canadian POV.

            Peak would be proud of you?!?

    2. pgl

      On the collection part – here is an interesting twist on transfer pricing. Let’s imagine that a Canadian supplier of goods or services establishes a U.S. distributor to handle its sales to U.S. customers and the U.S. does put a tariff equal to 10% on the imported price. Let’s also assume that the price to the U.S. customer is $100 but under arm’s length pricing, the U.S. importer deserves a 10% gross margin as its operating expenses = $8 per unit and a 2% operating margin is reasonable.

      What are the incentives to game this? When U.S. tax rates were 35% and Canadian tax rates were 25%, the income tax game was to raise the transfer price from $90 to closer to $92. But with a tariff, the same might be to lower the price below $90 to minimize Customs Duties. Of course with U.S. profit tax rates at $21, the income tax gaming would also be to lower the transfer price.

      Of course the Canadian Revenue Agency is wise to this game. And our Customs and Borders Protection (CBP) would have the same motivation to challenge such transfer pricing gaming.

      The new U.S. tax law has become the full employment act for international tax attorneys. Trump’s love for tariffs are now making the phones ring off the hook for customs attorneys. Regardless of the issue – lawyers always seem to come out ahead.

  9. Anon3

    If you like your health insurance policy, you can keep your health insurance policy.

    If you like your doctor, you can keep your doctor.

    Benghazi was caused by a YouTube video.


    1. pgl

      Gee – Trump serially cheated on his wives but they should not be upset as Bill Clinton did too? What an inane excuse for Trump’s serial dishonesty!

        1. pgl

          Maybe you should get on a horse that actually understanding international accounts and holds his rider to be even remotely honest.

      1. Anon3

        Trump may have cheated on his wife –we don’t know. Of course, you would believe a porn star so long as her claim is against Trump … you would believe a syphilitic dog. And we know Stormy isn’t in it for the money either. Unlike Trump, Clinton sexually assaulted womyn and in one case raped a womyn….. but I assume you think this behavior is okay … cause Dem dog.
        Extremism in the defense of Democrats is no vice, moderation in defending Dem crimes is no virtue.

    2. 2slugbaits

      And Trump has no idea who Felix Sater is…Never heard of the guy. Couldn’t pick him out of a line-up. No whopper there. You betcha.

  10. pgl

    GNP exceeded GDP for the U.S. in 2016 as Income receipts from the rest of the world exceeded Income payments to the rest of the world by about $200 billion for the year. This difference is pretty typical, which is why our current account deficit is typically less than our trade deficit even when services are included. Trump’s figures usually exclude not only the trade surplus in services but also the surplus in income receipts/payments.

    So in a way his accounting is doubly dishonest. Of course to say he is lying to his audiences may be harsh as something tells me that he has no clue about basic accounting.

  11. pgl

    “Menzie, unless you want me to go all RTD on your disingenuousness, admit there is a difference in the years compared.”

    If CoRev actually understood the numbers, he could not have honestly written this. The numbers do not change so much to change the qualitative issue here. Yes we had merchandise trade deficits with Canada in both years and the service trade surplus was larger in both years. So 2016 v. 2017 is a distinction without a difference.

    But knowing CoRev he will find some other way to insult all of our intelligences.

    1. CoRev

      Pgl, now resorting to ad hominem instead of deflection from his obvious error. Peak must be proud, watching you in action and confirming many of his complaints of your comments.

      Calling out obvious errors, pointing out deflection from that error, ad hominem attack and several other arrogant and dishonest actions is not insulting intelligence. Your own comment style insults intelligence.

      1. pgl

        My obvious error? No – you were whining that Menzie’s source has not published the services surplus for 2017. Many people have pointed out many times that you are treating the trade balance as the goods surplus/deficit making the error of not including the service surplus. One would think a two year old would have gotten the simple point by now – but not CoRev!

  12. Ed Hanson.

    Pick your poison, see the cut and paste, some real numbers or at least what the

    says are real and current.

    Goods by Selected Countries and Areas: Monthly – Census Basis (exhibit 19) 

    The January figures show surpluses, in billions of dollars, with Hong Kong ($2.6), South and Central  America ($2.4), Singapore ($0.9), Brazil ($0.5), and United Kingdom ($0.3). Deficits were recorded, in  billions of dollars, with China ($35.5), European Union ($15.0), Germany ($6.3), Mexico ($5.6), Japan  ($5.6), Italy ($2.8), OPEC ($2.5), India ($1.8), Taiwan ($1.5), Canada ($1.5), South Korea ($1.5), France  ($1.4), and Saudi Arabia ($0.6).     The deficit with members of OPEC increased $2.0 billion to $2.5 billion in January. Exports  decreased $1.2 billion to $4.1 billion and imports increased $0.7 billion to $6.6 billion.   The deficit with China increased $1.5 billion to $35.5 billion in January. Exports decreased $1.3  billion to $10.5 billion and imports increased $0.2 billion to $46.0 billion. 
    The deficit with the European Union decreased $2.1 billion to $15.0 billion in January. Exports  decreased $0.4 billion to $24.7 billion and imports decreased $2.5 billion to $39.7 billion.

    As you can see its China, the EU (mostly from the big economies), Mexico and Japan had the worst balance. And Yes even Canada got in on the deal this month.

    See the next post for quarterly stats from the same source.


  13. Ed Hanson.

    These are last quarter 2017, if I only had cut and paste as a kid I wouldn’t have started to copy by hand the Britannica.

    Goods and Services by Selected Countries and Areas: Quarterly – Balance of Payments Basis  (exhibit 20)

    The fourth quarter figures show surpluses, in billions of dollars, with South and Central America ($20.7),  Hong Kong ($8.3), Brazil ($7.7), Singapore ($5.1), United Kingdom ($3.2), Saudi Arabia ($1.1), OPEC  ($0.8), and Canada ($0.6). Deficits were recorded, in billions of dollars, with China ($89.4), European  Union ($29.0), Mexico ($17.4), Germany ($16.7), Japan ($13.9), Italy ($10.0), India ($8.0), France ($4.5),  Taiwan ($3.5), and South Korea ($2.6).      The deficit with China increased $7.4 billion to $89.4 billion in the fourth quarter. Exports  increased $0.4 billion to $48.0 billion and imports increased $7.7 billion to $137.4 billion.   The deficit with the European Union increased $4.5 billion to $29.0 billion in the fourth quarter.  Exports increased $4.7 billion to $136.0 billion and imports increased $9.2 billion to $165.0  billion.   The deficit with Japan decreased $0.9 billion to $13.9 billion in the fourth quarter. Exports  increased $1.6 billion to $30.0 billion and imports increased $0.7 billion to $43.8 billion.

    Usual suspects we all know about. Canada is neutral but Mexico still showing big. And its our EU allies, Germany, France and Italy who for year received advantage from our defense who should adjust. Perhaps its time to take Trump serious about NATO.

    And maybe a high five for Hong Kong, Singapore, Brazil, and the UK.


    1. pgl

      Hong Kong? Check out their national income accounts. Exports are twice their GDP. So are imports. How is that possible? Hong Kong is basically a trading company buying goods made in China and then sold to the rest of the world. Something called process trade. It is also subject to transfer pricing manipulation. And breaking out trade in goods versus trade in services is very illuminating. So be very careful before you tout any bilateral trade data with Hong Kong.

    2. 2slugbaits

      Ed Hanson So are you recommending some kind of centralized command economy in which the government directs citizens to buy goods and services from the US in order to achieve some national goal of bilateral trade balances with each trading partner??? Sure sounds like it. A better approach might be to raise taxes so that we didn’t have to run such large budget deficits. Just say’n.

      As to the EU NATO partners not paying their share, I’m not convinced. The US spends about 3.8 percent of our GDP on defense. It is true that our larger NATO partners only spend about a third of that on defense, so at a superficial level the claim that our NATO partners aren’t carrying their share of the load seems to have some credibility. Of course, the NATO countries close to the Russian border spend considerably more than Germany and France as a percent of GDP, but that’s hardly a surprise. The problem is that our large military budgets are also largely responsible for our large deficits, and much of our fiscal deficits are financed by those same large NATO countries with whom we run large bilateral trade deficits. In other words, we subsidize their defense with military hardware and they subsidize our tax cuts and defense budgets with loans. The other complicating factor is that our EU NATO partners pretty much confine their defense spending to just Europe. So Germany might only spend 1.2% of its GDP on defense, but almost all of that 1.2% goes to NATO. That’s not true of the US defense budget. Yes, we spend a lot more in defense in total, but only a fraction of what we spend is actually dedicated to NATO. So when you factor in just our NATO commitment I doubt that we spend anymore than Germany or France. Now there was a day when we did spend a lot on NATO. I remember back when USAREUR was referred to as the “Seventh Imperial Army” because USAREUR forces got pretty much anything they wanted. But those days are long gone. After the Cold War ended the European continent rose about six inches after we retrograded all of that iron we had sitting there. Finally, going way back to Thucydides and the ancient Greeks in the wake of the Persian Wars and the formation of the Delian League it’s pretty clear that hegemons would really rather their junior partners contributed financially rather than with military hardware. So if the US wants to be the NATO hegemon (and I think that’s something we should want), then we probably don’t want Germany and France to increase their defense budgets all that much.

      1. Ed Hanson.

        Slug you wrote.

        “Ed Hanson So are you recommending some kind of centralized command economy in which the government directs citizens to buy goods and services from the US in order to achieve some national goal of bilateral trade balances with each trading partner??? Sure sounds like it. A better approach might be to raise taxes so that we didn’t have to run such large budget deficits. Just say’n.”

        Where the heck did you get that, Awfully stupid, just say’n.

        No, the defense budget is not the cause of the big deficits. It is the non-sustainable transfer payments your betters insist on to continue to be your betters. I can’t stop it but they can’t buy my vote either, although mostly a viable alternative is not available.

        And yes I want Germany and France (and Italy) to pull their weight in NATO. There is a reason, and you implicated it when you wrote of the border countries.

        I want that viable deterrent, so our deterrent is not ICBM nuclear.

        1. 2slugbaits

          Ed Hanson

          Where did I get that idea? From the fact that your post seemed to suggest national governments should actively steer trade in order to achieve bilateral balances with each country. Otherwise, what was the point of your listing all of those countries? Anyone with any econ background at all would know that we run deficits with some countries and surpluses with others. Over the long run the two should balance out. And if we perpetually run trade deficits, then our response should be to thank all of those consumers in the other countries who subsidized our consumption without getting anything in return.

          The defense budget is part of the reason we have big deficits. As to transfer payments contributing to the deficit, need I remind you that FICA taxes exceed FICA expenses, so those actually reduce the unified budget deficit.

          As to Germany and France not pulling their weight, it sounds like you didn’t understand a word of what I wrote. There isn’t any evidence that their contribution to NATO is any less than our contribution, measured as a percent of GDP. Our total defense budget is larger than theirs, but that’s because most of our defense budget is directed toward non-NATO defense agreements. How many divisions do we have in Europe right now? Compare the operating tempo of USAREUR units to EUSA units in Korea or CENTCOM units in Afghanistan/Iraq. Not even close. In today’s world very little of our defense budget goes towards NATO.

          I want that viable deterrent, so our deterrent is not ICBM nuclear.

          The old Fulda Gap scenario no longer applies. You’re stuck in the 1970s when the plan was to fall back to the Rhine and then retake territory. The conventional Russian army is no longer the behemoth it once was. Russian equipment is junk.

          1. Anonymous


            I know you rather revel in your own points rather than actually read what other write. As for countries picking trade partners winners and losers, I am saying the opposite. I am tired of the major economies, and especially our friends from doing exactly that. And as for China, it has chosen a different path, somewhat restricting their populous from receiving full wealth from their efforts, causing worldwide distortion of basic industry by centrally planned over production. During its huge infrastructure expansion, China could have responsibly grown its basic industry, Steel, concrete, aluminum and relying much more on imports to cover shortfall. Now that their is less need within that country for these type products, the world suffers from the distortion. Absolutely a textbook study of mal-investment. The sooner these distortions are eliminated the better everyone will be. So for this case, I am advocating major economies to take on China, forcing the issue to end sooner.

            NATO contributions were set by treaty, I am asking for no more. And the Europes are not holding up to their obligation.

            And as I asked before, don’t try to put words in my mouth. The Gap is not what I am talking about, but the Ukraine, and the Baltic States. Viable conventional forces, and the willingness to use them, nad European in major part, is the best deterrent to Russian adventurism. Or maybe you think sanctions will do but they only happen after the fact. Preparedness is expensiveunless you compare it to what happens when not prepared.


          2. O'2slugbaits


            Countries that impose tariffs make everyone worse off, but they mostly make their home country consumers worse off. We would be better off if our trading partners didn’t impose tariffs; but that is not a reason why we should impose tariffs. It’s a case of cutting off your nose to spite your face. Trump doesn’t understand comparative advantage because he spent his life in real estate, where it’s a zero sum game. Trump’s approach risks a trade war that makes everyone worse off. Threatening tariffs on imports isn’t likely to make other countries reduce their tariffs; it’s more likely to make them expand tariffs. That’s the history of these things. Trump is not the master negotiator he imagines himself to be. He’s basically a dope.

            If you’re worried about the Ukraine and the Baltic states, then you should be really worried about Trump. Trump has been trying to reduce the US Army’s commitments to Poland, Romania and the Baltic states. DoD had to fight tooth and nail to continue Obama’s build-up of the forward Supply Support Activities in those countries. Trump’s instinct is to shut them down. And you surely don’t want the Baltic states to take the lead!!! That would be an insane policy.

            BTW, Ukraine is not a member of NATO. In fact, several of Trump’s key national security advisors worked over time to keep Ukraine out of NATO.

          3. Ed Hanson


            Lets narrow the scope a little bit, up to you. The tariff questions will come up again at Econbrowser and can be continued more in depth rather than short changing the subject because of National Security discussions. If you have read me from before, you would know I am not a tariff advocate as a grand solution. But I would not be surprised if tariffs became the third or forth best solutions if other countries refuse to change.

            You also wrote, “If you’re worried about the Ukraine and the Baltic states, then you should be really worried about Trump. Trump has been trying to reduce the US Army’s commitments to Poland, Romania and the Baltic states.” Either last you know this is not true, drank the Kool-Aid of the never Trumpers slant, or you are seriously out of date. Trump Poland speech last July cleared this up. But why would not an appeaser such as yourself think that pulling back from those near Russia obligations be a good idea? And unfortunately, if NATO does not get into shape, it might be the best course. And to make sure you understand my sentiments, I hate that idea, that option, that direction.

            Rand Corp is a serious think-tank. Here is what the say about the Baltics in 2015. Nothing NATO had conventionally could stop a Russian invasion success in less than 60 hours after commencement. And this is what it would take to deter the Russians, by stringing out the time it had. At a cost of 2.7 billion a year, and deployment “of about seven brigades, including three heavy armored brigades—adequately supported by airpower, land-based fires, and other enablers on the ground and ready to fight at the onset of hostilities—could suffice to prevent the rapid overrun of the Baltic states.” and later “Instead of being able to confront NATO with a stunning coup de main that cornered it as described above, an attack on the Baltics would instead trigger a prolonged and serious war between Russia and a materially far wealthier and more powerful coalition, a war Moscow must fear it would be likely to lose.” In other words deterrence.

            But what has NATO done.

            “In response to a changed security environment, Allied leaders decided at the Warsaw Summit in 2016 to enhance NATO’s military presence in the eastern part of the Alliance. Since then, four multinational battlegroups totaling approximately 4,500 troops have deployed to the Baltic nations and Poland. Canada leads the battlegroup in Latvia, with contributions by Albania, Italy, Poland, Slovenia and Spain. Germany leads the battlegroup in Lithuania, with contributions by Belgium, Luxembourg, the Netherlands and Norway. The United Kingdom leads the battlegroup in Estonia, with contributions by France. The United States leads the battlegroup in Poland, with contributions by Romania and the UK.”

            and this

            “The Alliance has also tripled the size of the NATO Response Force to 40,000 – with a high-readiness Spearhead Force at its core – and set up eight small headquarters (NATO Force Integration Units) to facilitate training and reinforcements.”

            Perhaps enough but certain far short of the Rand findings. Is it defense on the cheap? If so, very dangerous.



  14. pgl

    Maybe Trump was thinking about South Korea:

    “The U.S. goods and services trade deficit with Korea was $17.0 billion in 2016…The U.S. goods trade deficit with Korea was $27.7 billion in 2016…The U.S. services trade surplus with Korea was $10.7 billion in 2016.”

    Before CoRev quips what about 2017, USTR has not updated its information for 2017 yet and Census only reports trade in goods. Of course I have to admit I have not included trade with North Korea. And of course Maytag is going to whine that we are somehow losing money when we purchase Korean washing machines.

  15. pgl

    Given that CoRev wanted to school us that Trump has imposed tariffs on Canadian lumber, I was curious what has happened to lumber prices since Trump has become President:

    The good news for those U.S. lumber producers that whined about competition is that the price of lumber has doubled. Of course if you are building a new house, this is not exactly good news for you. Of course the claim that the Canadians were dumping chief lumber onto U.S. markets has always been a bogus claim.

    1. dilbert dogbert

      An old and fading memory says the US imposed a tariff on Canadian softwoods some years ago. If memory serves, the Canadians just invested more in their mills and increased productivity to the point where they could still export to the US.

    2. CoRev

      Pgl, another disingenuous deflection. Why disingenuous? Because you needed to be schooled “…CoRev wanted to school us that Trump has imposed tariffs on Canadian lumber,” …
      Why deflection? Because even you referenced the tariff but when trying to make a point chose (cherry picked) a low point: ” I was curious what has happened to lumber prices since Trump has become President:” as opposed to comparing prices after implementing the tariff.

      Had you done valid analysis instead of trying to play “gotcha” you might have noticed the lumber price dropped directly after the tariff, and the price increase since the tariff ~$110 is actually less than the late 2011 to early 2013 price jump, ~$175-180.

      I’m sure a well paid expert providing economics advice could explain some market process which accounts for those changes. Remember we are talking about policy impacts. If you continue to blame Trump for the current increase then it is just as valid to blame Obama for the even more dramatic increase.

      1. pgl

        Early 2013? Sorry dude but my calendar says is it now early 2018. And I provided a chart of lumber prices which are now closer to $500.

  16. PeakTrader

    Trump is generally and relatively much more honest. There’s a difference between honest and an honest mistake.

    Honest: Free of deceit and untruthfulness; sincere. synonyms: truthful, candid, frank, open, forthright, ingenuous, straight.

    I have no doubt Trump was sincere, candid, forthright, etc., rightly or wrongly, during the campaign and has tried to implement what he said as President.

    The hypocrisy is the dishonesty in politics disguised as economics or journalism. And, of course, there’s crooked Hillary, Pocahontas, being politically correct (wrong and deceitful), etc..

    1. pgl

      I see – he makes an honest mistake with each and everyone of his sentences! That is some defense of Trump – he is indeed really that stupid! Good to know!

      1. PeakTrader

        Trump is a man of action, not selective words the biased media is so preoccupied with to the point of hysteria.

        He has a lot of work to do to clean up the mess left by the Marxists/Socialists/Liberals.

        1. pgl

          “Trump is a man of action”!

          And George W. Bush got things done! A lot of really stupid and very bad things.

        2. O'2slugbaits

          Trump is a man of action

          Really? Then why is he so fat? He’s a lazy slacker who sits around all day watching Fox & Friends.

          clean up the mess left by the Marxists/Socialists…says PeakTrader from his cubicle in St. Petersburg.

          Trump’s history is to dump all of his problems into bankruptcy courts and stiff the folks to whom he owes money. Relying on bankruptcy courts to bail you out sure sounds a lot like socializing private risk to me. How about you?

          1. PeakTrader

            2slugbaits, you’ve been brainwashed by the propaganda, which isn’t difficult for you.

            You don’t become a billionaire or win a Presidential election ripping people off, being stupid, or being lazy.

            Get real.

          2. O'2slugbaits

            PeakTrader You can become a billionaire by being an amoral thug. That’s Trump’s gig. And inheriting a boatload of money helps too. In any event, why do you still believe Trump is a billionaire? Because he says so and conned Forbes into believing it. Trump probably has a few billion in assets, but it’s just as likely that he has many more billions in liabilities.

            And what we’re finding out is that you can become President if you’ve got the Russians doing all your work for you. And even at that, Trump still lost the popular vote by a large margin.

            How’s the weather in St. Petersburg? Do you cook your St. Patrick’s Day corned beef with vodka?

        3. noneconomist

          These would be the same Marxist/CommunistSocialists (i.e., All around economics evildoers) who
          1. Saw the Dow climb from 7949 on 1/20/2009 to 19732 on 1/20/2017?
          2. Managed to reduce unemployment from 8 to 4.6% in that same period?
          3. Inherited a $1.4 Trillion 2009 deficit and reduced that to $666 Billion for 2017?

          1. PeakTrader

            The Marxists/Socialists/Liberals gave us pro and anti growth economic policies simultaneously resulting in expensive and weak growth. Even the Fed couldn’t bail them out.

          2. noneconomist

            Well, PT, looks like the 2019 FY deficit will be close to a Trillion (current estimate is $985 Billion).
            Good to know we have solid conservative thinkers once again borrowing more to fund tax cuts.

          3. PeakTrader

            We should’ve had stronger growth and budget surpluses years ago, even with a stronger military.

  17. Ed Hanson.


    About Canada, I suspect that is true, but it is not a problem either way. I want Canada to get full value for their timber and other production. Canada is a good ally, a good friend, and a good trading partner, and an over all good country. But I suspect that NAFTA can be improved and that ours and theirs negotiators are seriously trying to do so.

    As for Mexico, I wish they could hold their balance near zero, but it is not a rich country relatively, and I can easily ignore such. It is the rich and big economies that have a responsibility to reduce their imbalance. Starting with Germany, France, and Italy in Europe and Japan and S. Korea in Asia. These countries are our allies, they have benefitted from our largest, and they should change their ways to mitigate the situation . And not for US jobs, not for our wealth, but in part, to protect the world monetary system. We do not need to turn back 40 years to revisit those troubles. I am tired of blame America first. It is time that critics take on these countries and their policies. Just because the US called the trade problems doesn’t exempt these other countries from responsibility. As your Mom told you, it takes two to fight. These countries can make reasonable and immediate changes to reduce the problems, avert a trade war.

    China is whole set of other problems. It is a communist controlled tyranny, with a leadership bent on keeping control by any and all means. It is no friend to the democratic countries mentioned above. Continuing accommodations with China is not a solution. Part of allied cooperation to mitigate trade imbalance must include actions against Chinese economic distortions until that country begins to truly cooperate. I love the fact that China has done well to pull so many from terrible poverty, but the time has come for it to change and not be so provincial.

    No simple solutions, Menzie, I certainly do not have any, but solutions must be found. And such solutions would never be found without the problems being called out. If only the economist in you could overcome the political self, Menzie, maybe your expertise could help solve those problems rather than continue to just inflame the situation. While you may see Trump as a problem, it is not your true education and expertise. You are not alone either, I read all ilk of economist suffering from Trump Derangement Syndrome, to varying degrees, forgetting that politics is temporary but the dismal science is forever.


    1. pgl

      “I want Canada to get full value for their timber”.

      The market price has doubled since 2016 so yea they are getting full value. US housing costs are way up as a result and it is NOW that Trump declares we need a steep lumber tariff? Just wow!

      1. CoRev

        Wow! Pgl continues with the deceit. “The market price has doubled since 2016…” What month in 2016 was Trump sworn in so that his policies were responsible?

  18. Erik Poole

    The First Nations in western Canada make a big deal out of ‘respect’. What exactly does ‘respect’ mean for indigenous peoples in western Canada?

    Well, history is informative. European colonial settlers stripped them of much of their resource base. Fish were taken and even today, fish are a source of conflict with open-access resident anglers, many of whom view themselves as ‘culturally superior’ with, for example, the modern innovation of catch and release angling (harrass, torture and release).

    Once reserves were established, subsequent governments would come along and expropriate parts of the reserve for the ‘public good’. One such community in the Fraser Canyon saw 25% of its reserve land base expropriated for public works such as railways.

    So ‘respect’ might mean respect for traditional economic property rights. It might also mean respecting contracts both informal and formal.

    In a world where one party’s word cannot be trusted, there is no ‘respect’.

    Given President Trump’s lie-a-minute style, how can this not reflect badly on his supporters and core constituency. Why would anybody trust a Trump supporter in a business deal? When that Trump supporter is willing to support a President who regularly and with unapologetic flair tramples over the truth?

    Americans appear to have a serious branding issue here. Although most of the economic damage to date by this President’s rhetoric may be felt by NAFTA partners Mexico and Canada, over the long run, this administration will hurt US economic prospects going forward.

    It would be a huge mistake to assume that people in other countries are just as enamoured with American celebrity narcissism as are so many regular voting American citizens.

    Note that Trump’s serial infidelity with his wives and the silence of Republican partisans will simply remind the enemies of the USA to what extent Americans are ungodly hypocrites who will recall without difficulty how Republicans reacted to Bill Clinton’s adventures with starry-eyed intern. That attitude appears to make it easier to attack American targets just like attitudes of cultural superiority make it easier for the USA and Israel to attack and kill their targets. Recognizing Jerusalem will invite even more blow back against American targets.

    The longer President Trump stays in power, the more damage he does.

  19. Rick Stryker

    Academics are so naive. Menzie must think that a poker player who raises when he has a pair of twos is “lying.”

    In the business world, people size up their negotiating adversaries. Trump aggressively asserted that there is a trade deficit not because he wanted to convince Trudeau. He knows that Trudeau can look up the number if he doesn’t know it. Rather Trump’s goal was to see how Trudeau would react. Would
    Trudeau be unsure of himself? Would Trudeau be dismissive or aggressive? What is Trudeau’s tell?

    Trump is so much smarter than his critics, who constantly misunderstand his tactics. And yes, Trump is the most honest politician we’ve seen or are likely to see in our lifetime.

    1. pgl

      I like this poker analogy. Trump and Wilbur Ross certainly are playing the American people for fools with their tariff schemes. I bet they have purchased lot of shares of stock in US lumber, steel, and aluminum companies and reaping the rewards of stock appreciation as the result of these tariffs. The rest of us should just fold as we have a very corrupt dictatorship in place.

      1. PeakTrader

        Trump and Wilbur created poker chips and brought trading partners into their game. It’s a great start. See Obama-Hillary-Kerry for huge poker losers.

        1. pgl

          “Trump no doubt sees potential political gains in steel- and aluminum-producing districts”.

          Exactly – pure pandering politics.

          “For the US, the most important trade issue with China concerns technology transfers, not Chinese exports of subsidized steel and aluminum. Although such subsidies hurt US producers of steel and aluminum, the resulting low prices also help US firms that use steel and aluminum, as well as US consumers that buy those products. But China unambiguously hurts US interests when it steals technology developed by US firms.”

          Martin Feldstein gets it. Navarro-Ross-Trump do not. Alas – Feldstein is not one of Trump’s advisers.

    2. O'2slugbaits

      Rick Stryker If Trump is so smart, then why does he think it’s important whether we run a trade surplus or trade deficit with Canada? I suspect it’s because the man thinks in zero sum terms, as do most people who deal with real estate. The only thing Trump accomplished was to make himself look like an ass to the rest of the world. The incident told us that Trudeau has manners (no surprise there…hey, he’s a Canadian!) and that he has command of the facts at his disposal. Trump is an idiot with the honesty of a Mafia gangster. Maybe it’s because he has such a long record of hanging out with gangsters, just like his dad and his grandfather. The whole family has the Cosa Nostra gene.

      As to Trump’s honesty, I’m afraid he’s set a new record with the various fact checkers at the NYT and WaPo.

      1. pgl

        Like the people in Canada believe every word Trump says? Really? They can look up the data the same way we did. But shhhh – don’t tell CoRev as he is still confused on basic definitions. Or maybe he is not that stupid but rather he is being his usual argumentative jerk.

        Now I love that link to Martin Feldstein’s oped. But read it carefully as Uncle Marty is not exactly endorsing those stupid Wilbur Ross tariffs.

    3. O'2slugbaits

      Rick Stryker Menzie must think that a poker player who raises when he has a pair of twos is “lying.”

      Here’s the problem with your poker analogy: unlike the game of poker, in international trade everyone knows what cards you have in your hand. So raising a bid when you hold a pair of twos is just plain stupid. You can’t bluff when everyone knows what you’ve got. And in this case Trudeau simply showed Trump that he in fact knew the cards that Trump was foolishly trying to play. Trump is a moron.

      1. pgl

        I can see Trump in a poker game with his opponents able to walk behind him to view his cards. And the fool still bluffs! No wonder he has to declare bankruptcy so often!

  20. Bobby

    Reading, and seeing a 17 billion loss, and then saying we were down by 17 billion, doesn’t make him dishonest. It makes him not using the same data as someone including services in a goods/services calculation. The site only shows one set of trade balance data, and it clearly shows a negative balance with Canada.

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