Dawn J. Bennett, CEO and founder of Bennett Financial Services and host of Financial Myth Busting, recently interviewed Amity Shlaes, New York Times bestselling author and chairwoman of the Calvin Coolidge Memorial Foundation, an organization dedicated to advancing the ideas of former President Calvin Coolidge. Shlaes is also an acclaimed newspaper and magazine columnist who writes about politics and the economy. She has written for Forbes Magazine, Bloomberg, and the Financial Times, and previously served as a member of the Wall Street Journal’s editorial board.
In her interview with Dawn J. Bennett, Shlaes discusses free trade and the presidential candidates’ views on the subject, including Donald Trump’s plan to impose large tariffs on Mexican and Chinese imports.
“They’re not just not economists; they’re politicians,” said Shlaes. “So they say what they think will please people in the very short run.”
Trump’s proposed tariffs could be as high as 35% for Mexico and 45% for China, and he claims the two counties are taking advantage of the U.S. and manipulating their currency to make it cheaper. Shales said, “When China keeps its currency at a certain level, that is to say when China makes things cheap for us, China makes things expensive for its own people. So they can’t buy a lot, or at least not as much as they could, if their currency is cheap, right?”
She continued, “So I wouldn’t even look at it that way. The world is never fair, right? And if we have to make our exports more competitive, that’s probably good, because no matter where the currency is, they will have to be competitive in future. One way to look at this is, ‘Am I doing it now or later?’ What those who advocate tariffs are saying is, ‘You don’t have to do it now,’ whatever it is, get an education, make your goods more competitive. ‘You can do it a little bit later,’ say, after the election. ‘But not really never; you certainly will have to educate yourself more as a country, United States.’ So politicians play on timing. They offer stimuli now, and the effects of the stimuli—the inflationary effects or the effects upon our currency—are later, not on their watch. But our lives are not the same as the period of political life of a politician; our lives are long. So we live with what politicians promise us.”
Shlaes also notes that the U.S. has manipulated its currency since before World War II, and other counties manipulate their currency when currencies are not on a true standard. But, is weakening a currency a viable economic strategy?
According to Shlaes, “Weakening a currency, in the short term, allows you to export more. That’s what it does. Supposing, though, you export something that is no longer needed, such as fax machines, you set up eight factories to make fax machines; because of your wonderful low currency, other people buy your fax machines. Then all of a sudden, they go to the internet, and you have eight fax factories. And you’re not nimble, because you, because of this currency, were lulled into thinking that you could always and forever sell fax machines to the world. That’s the problem. If it’s really favorable, it gives you a feeling of certainty that is counterproductive. That’s what happened to Japan; think of that. If you make yourself a total export engine, some export countries re-tool, and suddenly they make computers instead of fax machines, but that’s harder to do in practice. I think the better thing is to not look at the currency at all, and to look at what you can make better than other countries.”
To view Dawn Bennett’s full interview with Amity Shlaes, visit http://www.releasewire.com/press-releases/dawn-bennett-host-of-radio-show-financial-myth-busting-interviews-amity-shlaes-author-and-chairwoman-of-calvin-coolidge-memorial-foundation-675671.htm.