Two Sided Dollar Deficit

Trade is Technology; a deficit supports a surplus

In late April the Hoover Institution at Standford University hosted a fascinating panel discussion on tariffs, trade and national security. The entire discussion is worth listening to. One of the intriguing aspects of this panel discussion was the inclusion of a national security expert (Andrew Grotto). Consumption should not always define policy decisions. On occasion policy that hurts consumption is required to protect society - war being the most obvious and extreme example. There are some in the national security world who could argue - though Andrew didn’t - for tariffs on national security grounds. I was especially intrigued by Stephen Redding’s address which highlighted the link between trade and technology - and not just because he is a Brit.

Dollar out, AI in

He points out that outsourced production (imports) expand the ability of a country to consume beyond what it is capable of producing domestically. This is economically equivalent to an improvement in technology. He argued we would rarely believe that a tax on technology would enhance the economic prosperity of a country, yet we are willing to accept a levy on trade (tariffs). How far can we take equivalence between trade and technology?