Story by Joseph Ford Cotto
Casebook for Use With Macroeconomics.
For those of us who did not major in macro-anything -- even if we have a science degree -- it does not get any more boring than this.
Who would imagine, then, that the fellow who wrote said book in 1992 went on to dominate the libertarian sphere of academia. He did not do it from the fringe as Murray Rothbard did. No, this man went all the way to Harvard University.
To survive as a libertarian at the home base of political correctness, chic radicalism, and all-around self-righteous pretension, you must not only have keen intelligence, but a thick skin.
Thankfully, Dr. Jeffrey Miron has both.
A senior fellow at the Cato Institute, he has argued for matters ranging from comprehensive drug legalization to preventing 2008's now-infamous Wall Street bailout. In 2010, he literally wrote the book on libertarianism -- its apt title being Libertarianism, from A to Z.
"Miron has published more than 25 articles in refereed journals and 50 op-eds in the Boston Herald, Boston Business Journal, Boston Globe, CNN.com, nytimes.com, forbes.com, and other outlets," The Washington Post said of him during 2011.
Miron is also, as you might imagine, an interesting person to speak with. He and I recently conversed about various topics of importance to American society. Part of our discussion is included below.
Joseph Ford Cotto: Prominent economists and politicians often say that free trade will benefit America in the long run. Many Americans disagree strongly. What is your take on this situation?
Dr. Jeffrey Miron: Free trade is vital to a productive, growing economy. When we interfere with trade, we make it more expensive for consumers to buy the goods they want and more expensive for businesses to buy the raw materials and intermediate inputs they need.
Cotto: Libertarian economic theorists tend to believe that trade deficits are of minimal importance. Do these deficits really have a great impact on America's economy?
Miron: Trade deficits do not “impact” an economy in the sense of causing good or bad outcomes; trade deficits are the result of underlying forces. When a country imports more than it exports, this just means that, at that time, businesses and consumers think they get a better deal, to some extent, by purchasing more goods abroad than we sell to the rest of the world. To obtain this outcome – buying more now than we sell now – we give foreigners claims on our future goods, meaning we will export more later.
Cotto: Since it went into effect during late 1995, the North American Free Trade Agreement has formed a trilateral commerce bloc between Canada, the United States, and Mexico. From your research, has this proven to be of benefit to our country?
Miron: I have not researched this particular question myself. But the literature judges NAFTA to have been significantly beneficial for the U.S. economy.
Cotto: One reason the American economy fails to meet standards set by its postwar halcyon era is that it produces a decreasing number of material goods. What would you say could be done to reinvigorate our manufacturing sector?
Miron: Policy should not try to “reinvigorate the manufacturing sector” in any direct sense. Policy should focus on making the economy more productive – increasing the economic pie – regardless of whether that pie contains manufacturing, services, and so on. Some policy changes – such as less government protections for unions, less labor market regulation – might end up helping the manufacturing (and other) sectors, but the target should be efficiency, not this or that sector, or this or that industry.
Note also that manufacturing production has done quite well in the post-war period, due to increasing labor productivity (more output per unit of labor input). Manufacturing employment has gone down, but the sector has done fine.
Cotto: China is notorious for its currency manipulation schemes. Beyond this, however, it not only owns a tremendous amount of America's national debt, but accounts for much of our trade deficit as well. How do you suppose that the U.S. could level the playing field in the near future?
Miron: If China undervalues its currency, or subsidizes its exports, that is GOOD for countries that do business with China: we can buy their goods more cheaply. So we should just do so. China’s policies are hurting their citizens, not America.