Research

One obstacle to productive public discourse and deliberation is a syndrome whereby the media, whether mainstream or otherwise, present policies in a manner that could be called “false imbalance.”  No, I don’t mean “false balance.”  False imbalance is quite different. It refers to the temptation to cast in a negative light, policies that in fact are reasonable attempts to balance competing objectives.  Examples can be drawn from health care, fiscal policy, and monetary policy.

The US-China trade war heated up in the first week of August.  On August 1, Donald Trump abruptly announced plans to impose a 10 % tariff on the remaining $300 billion of imports from China that he had not already hit with earlier tariffs.   The Chinese authorities then allowed their currency, the renminbi (RMB), to fall in value below the highly visible line of 7.0 RMB/$.  The US Administration promptly reacted on August 5 by naming China a “currency manipulator” — the first time any country had been given that designation in 25 years.   Pundits declared a currency war, while investors responded by immediately sending stock markets down.

Of the two men whom Donald Trump had intended to nominate to empty seats on the Federal Reserve Board, Herman Cain has now withdrawn his name.  This leaves the other one, Stephen Moore.

The Senate would have to decide whether to confirm Moore. He has some problems roughly analogous to Cain’s:  he is considered to be under an ethical cloud and he often gets his economic facts wrong.  Cynics might respond that he would thereby fit right in with the roster of Trump nominees throughout the government.  But Trump’s earlier appointments to the Fed have been people of ability and integrity and have been doing a good job, Chair Jerome Powell in particular. Perhaps Trump did not start paying attention to Fed appointments until recently.

In Europe, twenty years ago this month, 11 long-standing national currencies disappeared and were replaced by the new single currency, the euro.  Since then, the euro has had its successes and failures.

Let us review the experience of the euro’s first two decades.  Where there were failures, to what extent were they the result of avoidable technical mistakes?  Of warnings not heeded?  Or were they the inevitable result of a determination to go ahead with monetary union in the absence of a political willingness to support fundamental changes necessary to make it work?

As of July, the US trade deficit was running worse than a year ago, despite improvement earlier in 2018.