A dirty secret of mine is that I go through long periods of not listening to podcasts I know that I enjoy and learn a lot from in part because I know that they will tempt me (successfully) to buy books that I don’t have the time to read. My office shelves and bedroom floor overflow with books on a wide range of topics, many of which I haven’t cracked, that I’ve been clued into by Twitter mutuals, interviews I’ve listened to, or reviews I’ve read (did I cancel my London Review of Books subscription both because of piles of unread copies and also many more book purchases? I did!). So it’s notable that I’m letting myself listen to more engaging and informative podcasts about economic issues recently (in addition to music and comedy ones), in part because I’m feeling strong pulls to drop what I’m doing and read some of those acquired books (or buy some new ones) about topics more closely related to what I’m doing now.
One pair of podcasts that dovetail really nicely was Tracy Alloway and Joe Weisenthal’s Odd Lots interview with Christian Parenti about his relatively recent (2020) book Radical Hamilton, Hamilton’s views on developmentalism, and the history of industrial policy worldwide, and a two–part conversation between Jesse Jenkins and Robinson Meyer of Shift Key with Brian Deese, former economic advisor to the Biden Administration (in addition to a bunch of other high profile positions), about the Inflation Reduction Act, the Biden administration’s approaches to inflation, tensions between monetary policy and fiscal policy, and some nitty-gritty trade stuff related to electric vehicles (and more).
These podcast episodes are great – characteristically so! Hosts and guests on each are speaking to important topics in ways that translate technical and abstract information into engaging and comprehensible episodes. Tracy, Joe, Jesse, and Robinson all ask pointed questions that I would about the relative benefits of economic intervention, neo-mercantilism (the support of domestic industry to the potential disadvantage of economic competitors) in different ways, the track record of economic intervention on behalf of domestic industrial actors/institutions, and the tensions that result at the macro level from the interplay of policies (monetary, fiscal, financial) and sectoral interests (firms, households, rural, industrial) in important ways. They underscore the politics inherent to decisions to intervene or – crucially! – not, and highlight the historic integration of political interests, government practice, and industrial potential. Christian Parenti and Brian Deese for their part bring a wealth of nuanced insight from their respective experience digging into the history of US economic policy and the legacies of debates in Alexander Hamilton’s time, and crafting economic policy in the midst of crises that will survive partisan discord. I definitely recommend that you all listen in or read the transcripts if you can.
Listening to each episode highlighted the contradictions of both industrial policy and trade policy for globally interconnected economies (which is to say, all of them), but particularly from the point of view of the US. I’ve written about this myself in the past few years in a few areas. In a chapter I wrote for the book Debates in Monetary Macroeconomics (edited by Steven Pressman and John Smithin, published by Palgrave Macmillan in 2022), “The Ambiguous Effects of Targeting Current Account Surpluses,” I discussed historic debates about the value of promoting domestic production for export specifically in order to generate trade (or current account) surpluses, as well as current considerations for economies about the relative benefits of targeting trade surpluses from monetary, fiscal, and aggregate expenditure standpoints. Digging into the history of thought (which was fun!) meant going back to Adam Smith, who was generally pro-trade on efficiency grounds, and acknowledged the potential for exports to provide a ‘vent for surplus’ though which economies could offload output for which domestic demand was insufficient, and counterposing that with both earlier thinkers who had promoted mercantilist looking policies like protectionism, imperialism/colonialism in search of bullion, and other policies designed to promote domestic manufactures and Friedrich List’s later ideas about the benefits of fostering domestic industry through government support that might be called developmentalism. I also contrasted these ideas with John Maynard Keynes and Joan Robinson’s nuanced critiques of export-led growth. While Keynes’s essay “National Self-Sufficiency” is often described as a tribute to the promotion of economic self-reliance, it in fact argues that some nations (namely those with large economies) have the luxury of prioritizing domestic consumption, while others (smaller economies) may rationally target trade surpluses and promote domestic industries in order to stay afloat in order to access foreign currencies from those stronger economies. Joan Robinson, for her part, strongly critiqued ‘beggar thy neighbor’ polices (which I was delighted to hear Tracy ask about) given the inability of every economy to generate a trade surplus. My favorite chapter of Keynes’s General Theory may actually be the last one, where he talks about the destructive consequences of protectionism during the interwar period, and writing this chapter taught me that when many powerful economies (eg, the US and Japan) enact trade agreements with weaker partners, the larger economies tend to eschew trade protections that hurt the smaller economy, while allowing the smaller economies to enact protections against their stronger partners.
(These agreements can of course be revoked in the name of statecraft; the US famously suspended such an agreement for Ecuador in 2013 when Ecuador declined to extradite Julian Assange to the US when he was hiding in Ecuador’s embassy in London, and in later years, Ecuador’s subsequent president revoked Assange’s asylum in that building in part to revive trade relations with the US.)
My own conclusion in the piece, if the title didn’t make it clear, is that targeting trade surpluses is sometimes beneficial and sometimes not. Large economies like the US shouldn’t be too worried about the size of the export deficits, since domestic demand more than compensates for the losses from trade. For smaller economies, the question is less clear; smaller economies are more mindful of their access to foreign currency reserves, and trade is one means of building those reserves up. Trade surpluses are also a good way to insulate against austerity measures from organizations like the IMF; Isabella Weber’s book How China Escaped Shock Therapy: The Market Reform Debate clearly demonstrated the value of large trade buffers in protecting economies from punishing conditionality from international financial organization.
Finally, I argued in the chapter – and I continue to think it! – that worrying about trade surpluses in ways that prevent attending to climate change is shortsighted. This last bit had me listening super intently to the part of Meyer and Jenkins’s conversation with Deese. The Biden Administration has included provisions in the IRA that many have critiqued as neomercantalist for how it denies fiscal support for the purchase of Chinese produced EVs and other technology that would lead to a decrease in carbon emissions overall. While I think that Deese may have avoided a key part of Jenkins and Meyer’s question about whether protectionism of US industry was more important than quickly implementing, I think he made an important point about the virtues of targeting output for both domestic and international demand. The promotion of domestic production isn’t mutually exclusive with demand for foreign output, and there are benefits, particularly if we conceive of climate change as a defense challenge, which is a trope that Tracy and Joe invoked early in their conversation with Christian Parenti. If we want to move out of the bad Prisoners’ Dilemma equilibrium of neoliberalism (decreased public spending and decreased domestic manufacturing except in a handful of manufacturing powerhouses) toward a better Prisoners’ Dilemma represented by Bidenomics (more domestic production around the world to meet the global challenges of climate change) targeted economic policies that benefit producers and households and that capitalize on both fiscal and monetary powers will all have to be deployed.
This is hardly the end of what I’m thinking about since listening to these podcasts, so more soon, hopefully! However, to briefly go back to the lede, listening to these episodes is leading me to buy more books (ahem, Radical Hamilton, and I definitely have my eye on Paper Soldiers after listening to another great Odd Lots episode interviewing Saleha Mohsin about the US dollar and its international power, which is definitely linked with the trade stuff described in this piece, that chapter I wrote, and other papers I’ve written recently) and also forcing me to finally read Trade Wars Are Class Wars, which I’ve read in bits and pieces since its publication back in 2020.
Nina Quinn Eichacker 