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Thomas Firey

Articles by Thomas Firey

A Trade “Level Playing Field” Isn’t So Great

15 days ago

China’s tariffs on imports are more than double the United States’ (calculated on a weighted-average basis). Critics of open trade cite this disparity and similar ones with other nations to justify America’s current trade wars. America should have a level playing field, they say.
By this, they seem to mean that the U.S. government should apply the same tariffs to other countries’ imports that those countries apply to U.S. exports. But a level playing field can be very, very bad because the gain to domestic producers from raising tariffs is more than offset by the loss to domestic consumers.
To better understand this, we need to think about supply and demand curves. If you took Econ 101, you likely remember the graph showing how a transaction tax reduces both

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Free to Trade with China (and Anyone Else): A Response to Michael Brendan Dougherty

25 days ago

What about China?
That’s the surprising objection I’ve received to my “Departing the Shining City,” which ran on The Bulwark over Labor Day weekend. My essay looks back on Michael Anton’s “The Flight 93 Election” and disputes his objections to immigration (broadly, not just “illegal immigration”) and trade (again broadly, not just “unfair trade”), as well as his rejection of Goldwater–Reagan conservatism.
I expected to get some criticisms for the essay, but I’m surprised that one I’ve received is a very narrow objection to trade with one particular nation: What about China?
For instance, National Review’s Michael Brendan Dougherty makes this objection using two intertwined arguments:
China’s industrial policies give its producers advantages that aren’t what’s

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Yield Curve Inversion: Are Investors Really “Fleeing to Safety” from a Looming Recession?

August 15, 2019

The media and economics talking heads are worrying about the current inversion of the yield curve, the graph of market-set rates of return on U.S. government securities of increasing lengths. Inversion is often interpreted as a sign that the stock market is expecting a recession—though, as Paul Samuelson quipped, the stock market has accurately predicted nine of the last five recessions.
Usually, the yield curve slopes upward, reflecting investors’ demand for better rates of return in exchange for tying up their money for more time. The commonly told story is that an inversion, where yields are higher for shorter-term securities than longer-term securities, shows that investors are “fleeing to safety,” moving their money from stocks and other risky investments to

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Crowdsourcing: Help Me Fine-Tune My “Perfect Trade Surplus” Offer

May 31, 2019

Having read numerous endorsements of President Trump’s current trade war with China, I’m considering offering these folks a deal: the opportunity to run a perfect trade surplus against me. I’d offer this in the spirit of Julian Simon’s wager with Paul Ehrlich, albeit much more smart-alecky. (Hey, I gotta be me.)
I’m asking Econloggers to help me fine-tune this offer. Here’s what I have so far:
I want to offer the deal of a lifetime to President Trump, his supporters, and all others who believe the U.S. trade imbalance with China is unfair to America: run a perfect trade surplus with me!
To seize this opportunity, compile a list of all your property that you think I’d want: real estate, vehicles, financial assets, jewelry, furniture, appliances and electronics, and

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No, Krueger Didn’t ‘Prov[e] that Raising the Minimum Wage Doesn’t Increase Unemployment’

April 23, 2019

News of Princeton economist Alan Krueger’s recent death prompted well-deserved tributes and reflections on him and his academic and public policy work. (David Henderson offers some kind words here.) The eulogies underscore Krueger’s sharp and inquisitive mind as well as his reputation for integrity, careful scholarship, and concern for his fellow man.
However, some of the tributes go a bit too far when they claim that among his accomplishments was “proving that raising the minimum wage doesn’t increase unemployment,” to borrow from Bill Clinton. Barack Obama wrote something similar in a lengthy tribute. (In 1994–1995 Krueger was chief economist at the Labor Department under Clinton; in 2009–2010 he was assistant treasury secretary for economic policy under Obama

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WaPo Embraces its Inner Malthus

April 11, 2019

Washington Post political reporter Colby Itkowitz writes:
During floor debate ahead of a vote on the Green New Deal, Sen. Mike Lee (R-Utah) told his colleagues that if they really want to address environmental concerns they’ll encourage people to couple off and have more babies. … This recommendation, to add more people to the planet, doesn’t track with science or reason. A 2017 research article determined that one way an individual could contribute to eliminating greenhouse gases is to have one fewer child.
That’s the nut from her snide web article, “Sen. Mike Lee Says We Can Solve Climate Change with More Babies. Science Says Otherwise.” Post national correspondent James Hohmann deemed the article noteworthy enough to be the “Hot [Read] on the Left” in his “Daily

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Is Capital Morally Superior to Labor?

November 29, 2018

Washington Post writers Chris Ingraham and James Hohmann each offered laments this week for General Motors’ announcement that it will idle several North American sedan-manufacturing plants, laying off thousands of workers. GM’s move is part of a shakeup in its offerings, as consumer demand shifts from sedans to more versatile SUVs, crossovers, and light trucks.
But Ingraham and Hohmann aren’t simply concerned about the job losses or the specific harms that accompany generally beneficial “creative destruction.” Rather, they write that the move is “another victory for capitalism over labor” (to borrow from Ingraham’s title) and a demonstration of “a crisis of confidence in American capitalism” (to borrow from Hohmann’s).
Writes Ingraham:
General Motors on Monday

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Will Trump Join the “Fight for $15?”

November 12, 2018

Despite the post-election spin, last Tuesday’s ballot results were very bad for President Trump. Not only did Republicans lose control of the House, but several governorships, too. Further down the ballot, Democrats picked up state attorneys general and hundreds of state legislative seats.
Even the GOP’s lone headline achievement, increasing its majority in the Senate, should disappoint the White House. Of the 35 Senate seats at stake, 24 were held by Democrats and two more by allied independents. That means Republicans had many more opportunities to gain in the Senate than their Democratic rivals, and many fewer opportunities to lose. Netting a couple of seats and registering shoestring victories in several Senate races in GOP-friendly territory during an economic

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