To return to the example above, the neo-mercantilists believe that if we stopped imports from China, consumption would not decline. Instead all those toys and sneakers and iPhones would be built in America with American workers. But Janet Yellen has made it clear that the Fed regards 4.6% unemployment as roughly full employment, and any attempt by Trump to boost AD will be met with tighter money. The only way to boost output significantly is supply-side policies, and mercantilism is certainly not a supply-side policy.
Sumner is shooting down Trump econ. Specifically, "Peter Navarro, who was just named head of Trump's National Trade Council".
Shoot 'em down, I don't care. But look at Sumner's argument:
Janet Yellen has made it clear that the Fed regards 4.6% unemployment as roughly full employment, and any attempt by Trump to boost AD will be met with tighter money. Therefore, the only way to boost output significantly is supply-side policies...
I added the word "therefore", but it is implicit in the original.
Sumner is saying that we are at full employment, at least in the opinion of the person whose opinion matters. And because we are at full employment, boosting demand is not an option. Therefore, he says, if we want economic growth, the supply side is the only way to get it.
If it's not demand it must be supply? Supply and demand is how the economy works, sure. But "supply and demand" doesn't necessarily define what's wrong with the economy. To assume that it does is no better than "drawing causal implications from the famous GDP identity" -- something Sumner says is an "EC101 mistake".
Sumner is saying we won't be allowed to increase demand, so the only way to get more growth is by improving supply. But there is no connection between the problem and Sumner's solution. It may be true that "we won't be allowed to increase demand", but increasing demand isn't the problem. It's a solution, one that Sumner says is not an option.
Sumner bounces off the word "demand" and lands on the word "supply". The problem is inadequate growth, but Sumner has shifted our focus to "demand". So it sounds logical when he offers "supply" as an alternative to "demand". It sounds logical, but it is not.
Look, I know Sumner said it, and a lot of people think he's a smart guy, and I think so too, but he's mostly just a bullshitter.
Here's the problem: We need more growth.
Here's Sumner's solution: The supply side is the only option.
Where is the analysis of the problem? There isn't one. Where does Sumner identify the cause of the problem? He doesn't. He only uses the logic of a bullshitter:
1. We cannot boost demand.
2. "Supply and demand".
3. Therefore we must boost supply.
This is Sumner's whole argument: "Supply and demand".
It's not an argument. It's not a logical analysis of the cause of inadequate growth. It's just bullshit.