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Letter: Forget DEI, etc.: Focus teaching on economics
Op-Ed · April 16, 2025
Consider this a public service announcement intended to clear up the fog of confusion and muddled thinking concerning President Trump’s economic agenda.
My intended audience is anyone who has never read a mainstream standard textbook on macroeconomics, trade theory or international finance.
Point No. 1: In general, both tariffs and higher interest rates tend to appreciate the currency, at least among advanced economies.
There is a long history of a very strong correlation between the two.
But ever since “Liberation Day” interest rates have spiked (largely due to investors having to dump Treasury securities in order to meet margin calls) while the dollar has depreciated significantly (largely due to investors fleeing US investment and moving money abroad).
This is the kind of behavior we normally only see when Third World countries are about to experience a financial crisis.
It is a signal that markets no longer see the US dollar as a “risk free” investment that anchors a security market line.
This should worry the average American a lot more than the recent turbulence in the stock market.
Point No. 2: Tariffs will not bring back high-paying manufacturing jobs.
Believing otherwise is completely delusional.
Tariffs will only make the nation poorer.
The reasons why tariffs will not bring back high-paying manufacturing jobs are complicated, counter-intuitive and beyond the scope of a simple letter to the editor.
In any event, it’s not obvious why we should want to bring back jobs like sewing shirts and athletic shoes, which add little value to the economy.
If we want to raise wages for blue-collar workers, then we should be pursuing very different macroeconomic policies.
Point No. 3: Readers should understand that the US comparative advantage is in the production of high-tech capital goods, food production and especially services.
In fact, services account for almost 70 percent of the US economy.
It’s interesting that Trump focuses exclusively on the US trade deficit in the goods sector, but ignores the fact that the US runs large trade surpluses in the services sector.
For example, foreign tourists visiting the US and foreign students studying in the US account for approximately $150 billion in exports.
And yes, those are scored as exports.
But yet Trump is doing his best to discourage tourists and foreign students from coming to this country.
It makes no sense.
Point No. 4: Typically recessions come about as a result of weak demand either due to consumers cutting back on purchases and/or businesses scaling back investment.
Right now we see evidence of both happening; e.g., the recent drop in consumer sentiment surveys and companies delaying investment due to uncertainty about tariffs.
But we’re also seeing problems on the supply side.
The collapse in immigration along with falling foreign direct investment will shrink the economy’s potential output.
And cutting research at universities will hurt future productivity.
The twin shocks of weak aggregate demand and a contraction in potential aggregate supply will be hard to reverse even long after Trump leaves office.
Point No. 5: Pollsters regularly tell us that voters usually rank economic concerns at the top of their concerns; but yet our high schools are doing a miserable job of educating future voters in the one thing that tops their list of concerns.
Instead of worrying about Diversity Equity Inclusion programs or “critical race theory” or banning books, perhaps the Republicans in our state legislature should focus on making sure high schools do a better job of teaching mainstream textbook economics to our students.
Mike Johnson
West Branch
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