Peter Navarro: Genius or idiot? Or neither? - 2016-12-21
Tyler Cowen says that UCI professor Peter Navarro is "one of the most versatile and productive American economists of the last few decades." Matt Yglesias says Navarro is an idiot. Who's right?
I think there's a category error here. Back in September, Navarro co-authored a paper about Donald Trump's trade policy. Roughly speaking, Navarro relied on the following accounting identity:
GDP = Consumption + Investment + Government Spending + Trade Balance
So if our trade balance goes up from -$500 billion to $0, Navarro said, GDP will go up $500 billion and the government will collect a lot of extra taxes. Hooray! But as Yglesias points out, this is comic-book-level nonsense.1 Let me offer an analogy: