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June 21, 2019

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Professologue

Mercantilism and zero-sum thinking are indeed widespread amongst the untutored.
As far as I can see you didn’t explain why stagnation would increase those specific beliefs.

mike

Very Very good article I read a while ago, connecting Trump's zero sum mentality to his real estate background. In other words , premium land in places like New York is in restricted supply, so to win, another guy most always lose. Wish I 'd kept a link to it.

Jim

Its odd really, because if one side of the argument is about zero sum thinking, its the Left. That there's a fixed amount of economic pie and the only way to make Peter richer is to rob Paul.

Sandwichman

I'm afraid you are overlooking the inconvenient truth that economics is fundamentally "zero sum." Sure, Adam Smith railed against mercantilism but he adopted the "certain quantity of work to be done" premise as the basis of his invisible hand metaphor.

Supply and demand? Equilibrium mediated by price is predicated on the assumption of a closed system. Cogito ceteris paribus ergo zero-sum!

It is easy to point out zero-sum thinking in an adversary's economic logic precisely because zero-sum thinking is pervasive in "economic logic." Without the ubiquitous zero-sum assumptions, the outcomes of policy interventions are fundamentally indeterminate. But economists love their predictions.

George Carty

I think this is the article Mike was referring to:

https://www.nytimes.com/2016/03/20/magazine/what-donald-trump-doesnt-understand-about-the-deal.html

And isn't mercantilism these days less about money and more about unemployment, in the form of mercantilist nations stealing jobs from their trading partners?

Christopher Herbert

So the US built itself into an economic behemoth using tariffs and subsidies. Was that 'mercantalist?' I don't know, but it sure as heck wasn't 'free market.' Germany runs current account surpluses, while the rest of the EU stagnates. IS that mercantalist of Germany? I don't know. The US went free market and now it's a weak sister, no longer feared economically. Nukes is another matter, of course.

Ralph Musgrave

My only criticism of the above article is the suggestion that daft US trade policies are all down to one man, i.e. Trump. The truth surely is that Trump couldn't implement his daft policies without a large amount of support from the Republican Party in general.

Thomas

...wait till he sees how much QE the Fed did compared to the late-to-the-party ECB!

https://fred.stlouisfed.org/series/WALCL

Swami

Except the same source you linked to has a further attachment that explains why median income seems to be flatlining when it really hasn’t at all.

https://fredblog.stlouisfed.org/2016/12/the-puzzle-of-real-median-household-income/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog

As someone familiar with the issue, the apparent flatlining is a result of smaller household sizes, lower marriage rates, higher immigration rates, and excluding benefits and retirement contributions. When you adjust for these, use the proper inflation rate (PCE) and consider taxes and transfers, median incomes are up between 40 and 60 percent over the past 40 years and have risen at a higher rate this century in the US than most developed countries.

Please correct your error above, so we can trust your "facts" going forward.

Ted

Maybe not as dumb as you think. If Draghi's stimulus increases net capital outflows to the US, which it almost certainly will do, to the extent that some (probably most) of it flows to the US, it will force the Americans into lower savings, higher debt and a bigger trade deficit:
https://carnegieendowment.org/chinafinancialmarkets/78304
https://carnegieendowment.org/chinafinancialmarkets/79261

Ken Schulz

Swami, the article you link did not reflect any change over the same period, of hours worked per household. A person's perception of economic stagnation may be informed by their personal history of income as well as their household history. One should look at median earnings per hour, or per FTE job, and probably within a number of quantiles, not over the entire population.

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