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Navarro vs. Navarro

Summary:
From WSJ today, an op-ed by Peter Navarro: The national-security externalities associated with Trump trade policy may be even more  consequential. A case in point is the tariffs being used as leverage to defend America’s technological crown jewels from being forcibly transferred to Chinese companies—from artificial intelligence, robotics and autonomous vehicles to quantum computing and blockchain. These industries comprise the core of the next generation of weapons systems needed to repel threats from rivals like China, Russia and Iran. One must ask the antitariff forecasters: Where are the benefits of a freer and more secure American homeland counted in your models? From Peter Navarro, The Policy Game (Wiley, 1984), p.82, on the national security/trade policy nexus. National Security

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From WSJ today, an op-ed by Peter Navarro:

The national-security externalities associated with Trump trade policy may be even more  consequential. A case in point is the tariffs being used as leverage to defend America’s technological crown jewels from being forcibly transferred to Chinese companies—from artificial intelligence, robotics and autonomous vehicles to quantum computing and blockchain. These industries comprise the core of the next generation of weapons systems needed to repel threats from rivals like China, Russia and Iran. One must ask the antitariff forecasters: Where are the benefits of a freer and more secure American homeland counted in your models?

From Peter Navarro, The Policy Game (Wiley, 1984), p.82, on the national security/trade policy nexus.

National Security Benefits and Costs. On the benefit side, protectionism within certain basic industries like autos, steel, and electronics helps to create and sustain and industrial base that, in times of war or national peril, can be shifted to defense purposes. However, this national security argument–and the existence of any benefits resulting from protecting these industries–can legitimately be called into question for several reasons.

First, the existence of any sizable benefits rests on the assumptions that import competition in our defense-related industries would not only reduce the size of these industries but also shrink them to the point where they would be too small to support our defense needs…

Second, it is highly possible that our defense capability might actually be enhanced–not damaged-by import competition. Without the umbrella of protectionism, our defense-related industries would be forced to operate at lowest cost, engage in more research and development, aggressively innovate to stay one step ahead of the competition, and modernize their plants at a faster pace. …

On the national security cost side, the major effect of protectionism is to threaten the stability of the international economic order through a global trade war. …

Full disclosure: I worked as a research assistant on this book.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

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