TheDC: Should we be concerned about the trade deficit? And in that vein, China: friend or foe?
TS: I don’t think nations have friends. They do have foes. In some respects China is a foe and in some respects it is not. The whole idea of friendship between nations just grates to me. When I hear that phrase it is like hearing chalk scraping across a blackboard. I cringed when George W. Bush spoke of, “my friend Vladimir Putin.” Countries don’t have friends, they have alliances for the convenience of the moment, and when the moment passes they have different alliances.
The trade deficit is not something I would lose a lot of sleep over. If you look at history, for example during the Great Depression of the 1930s we had a trade surplus every single year. It didn’t help us get out of the Great Depression. By the same token, during the prosperity of the nineties we had a trade deficit every year, and that didn’t stop the prosperity. Those words [trade deficit] have a lot more emotional impact than they have economic impact.
TheDC: Politicians make a lot of noise about the large gap between the “rich” and the “poor” and how “unfairly” income is distributed — a CEO making more than a teacher, etc. How do we justify, do we need to justify, such discrepancies in income and is the gap between the “rich” and the “poor” a big deal?
TS: One of the things that is sad about this is people don’t even define what they mean by rich and what they mean by poor. They usually talk in terms of comparing two different income brackets. And the problem with that — when you are comparing income brackets, or any other statistical category, you are not necessarily comparing flesh and blood human beings and that is because people move from these brackets, from one to another, over the course of their lifetime. So most Americans are in the bracket defined as “poor” when they start out, in their entry level jobs, and somewhere in their peak, sometime in their fifties or sixties, they are in one of the brackets the media and others call “rich.” But they were not rich or poor in either case.
One of the true hallmarks of dishonest statistics are citations of household income. And that is because households contain radically different numbers of people from one income class to another, from one time period to another, from one race to another, etc. For example in the top 20 percent of households there are 64 million people, in the bottom 20 percent there are 39 million people. So we are comparing apples and oranges from the beginning. If you talk in terms of people who work, there are more heads of households that work in the top 5 percent than there are in the bottom 20 percent. So how big of an injustice is it that people who work have more money than people who don’t work?
Age is huge in these things. Most of the people who are at or near the minimum wage are from 16 to 24 years of age. We do not need a government program to stop them from staying 16 to 24, they are going to grow out of that regardless of what the government does. So a lot of this is frankly just hogwash.