Ben Shapiro Debunked on Trade

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From Ben Shapiro is Wrong on Tariffs:

Ben Shapiro released a viral video in which he “debunked tariffs” in three minutes.  I suggest watching the video before proceeding.

Shapiro begins by saying that President Trump does not support tariffs on economic grounds because it is impossible to do so.  Instead, he thinks Trump wants tariffs for cultural reasons—tariffs are just a part of the political narrative.  This is nonsense.

Donald Trump has called for tariffs on economic grounds since the 1980s, and to claim Trump is lying is unnecessarily dismissive, patronizing, and profoundly unhelpful.  Rather than straw-man the President and proceed to joust his effigy, Shapiro should address the arguments head-on.  He needs to tackle the economic case for tariffs.

Eventually he does do this, noting that richer countries often run trade deficits—therefore trade deficits are good (or at least not bad).  Shapiro states that Iran has a very large trade surplus, but it is fairly poor.  Conversely, the US, UK, and Canada have the world’s largest trade deficits, and yet these nations are among the world’s richest nations.  “Where would you rather live?” he asks.   Also, developing countries like India often run large trade deficits—clearly surpluses aren’t needed for economic growth.

The problem is that Shapiro cherry-picked his examples to prove his point—the totality of the data shows quite the opposite, that countries with trade surpluses are both richer and grow faster than those with deficits.

According to data from the International Monetary Fund, the average per person Gross Domestic Product (GDP) at Purchasing Power Parity (PPP) for those 20 countries with the largest trade surpluses is 48 percent larger than those 20 countries with the largest trade deficits.  That is, the average GDP per person in the countries with the biggest trade surpluses is $49,941, while the average GDP per person in the countries with the biggest trade deficits is only $25,787.  Countries with big surpluses are richer than those with big deficits.  This is the opposite of what Ben Shapiro claimed.

Furthermore, according to data from the World Bank, those same countries with large trade surpluses grew faster than those with large deficits.  The average annual rate of GDP at PPP per person growth between 1980 and 2014 for the above trade surplus nations was 5.46 percent.  Meanwhile, the trade deficit nations grew by an average of just 3.99 percent.  Essentially, nations with trade surpluses grew 27 percent faster than those with deficits over a 25 year period.  Most importantly, this data accounts for changes in population—we’re talking about real growth here.

When Ben Shapiro picks Iran as his representative trade surplus nation, you must remember that he did not pick Germany, Japan, the Netherlands, Singapore, Israel, Ireland, Switzerland, Sweden or China.  Likewise, when he picks Canada as a representative of a trade deficit nation, remember that he did not pick Egypt, Indonesia, Pakistan, Oman, or Brazil.

On balance, nations with trade surpluses are richer and more technologically advanced than deficit nations—but you wouldn’t get this impression from Shapiro’s video.  His argument is nothing but sophistry.

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About Spencer P Morrison 158 Articles
J.D. B.A. in Ancient & Medieval History. Writer and independent intellectual, with a focus on applied philosophy, empirical history, and practical economics. Author of "Bobbins, Not Gold," Editor-In-Chief of the National Economics Editorial, and contributor to American Greatness. His work has appeared in publications including the Daily Caller, the American Thinker, and the Foundation for Economic Education.