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Why Men Passionately Believe What They Know Isn’t True
Editor’s note: Beginning next week, Porter will deliver the Daily Journal every day that markets are open – that is, every weekday, Monday to Friday.
Inside today’s Daily Journal…
Essay: The Power Of Propaganda
AI boosts BWX Technologies
Uber’s CFO is bullish on… UBER
Private credit continues to crack
Chart Of The Day… Texas Pacific Land
Today’s Mailbag
They’re ripping us off!
In virtually every angry reply I received from my dear, paid-up subscribers about Monday’s Journal essay “Thank God For Unanswered Prayers,” there was this extraordinary claim: U.S. trading partners are unjustly enriching themselves at our expense.
One example:
This president is a businessman and seems to know better and if he wants to raise tariff taxes, so be it because we’ve been getting ripped off by other countries for too long.
Trade is the voluntary exchange of goods or services at market-clearing prices. There is no “loser” in such exchanges, just like there’s no loser when you run a “trade deficit” with Costco. Both sides win. How do I know for sure? Because if both sides weren’t winning there would not have been an exchange. No one gets “ripped off” by trade.
Instead, free exchanges and free markets are the best means of creating wealth. This isn’t new information. Adam Smith (Wealth Of Nations) clearly described these concepts in 1776, and they’ve been tested continuously in the real world since. Free trade always wins for the same reason that free markets always win.
Today the comparative advantage wealth-creating dynamic of global trade is the most well-documented and best-understood concept in all of economics. It is the one thing that every credible economist (left, right, or center) can agree on. And yet… the sophistry of “they’re ripping us off” never dies.
The basis of the claim today is that because other countries have tariffs and we don’t, they are “cheating” (see “Mailbag” below).
But that’s absurd too.