Free Grain, ‘The Americans’ & Adam Smith

I listened to an interesting conversation on the John Batchelor show – where there are a lot of interesting conversations – between the host and John Tamny about his piece on how F/X’s ‘The Americans’ Flunks Basic Economics. Like Tamny, I watch “The Americans” and agree with him that it is really well done.  However, Tamny points out that a major plot point this season is based on some faulty economics that is, as he discussed with Batchelor, contra Adam Smith.  Tamny writes (spoiler alert):

[T]he producers of the show have chosen to make U.S. grain sales to the former Soviet Union an underlying theme.  In doing so, they’ve managed to reveal a misunderstanding of basic economics….The Jennings believe that the U.S., a seller of grain to the Soviets, could starve the U.S.S.R.’s people by virtue of its agricultural scientists creating a bug that would compromise its grain crop….the Jennings believe that dependence on foreign producers for goods and materials means the buyers will be caught empty-handed should war take place.  Supposedly trade-shrunken industries will lack the inputs necessary to build armaments and grow the food necessary to feed the troops.  It all sounds compelling, but it’s untrue.  We’ve heard this all before.

Tamny offers up some historical examples to prove his point that goods find their market no matter the barrier. To those I can add a bit of personal experience.  Several of the ships I worked on while in the Merchant Marine (all American-flagged vessels) carried American grain to foreign countries. This “free” grain was surplus produced by American farmers and purchased by the U.S. Government. In essence, subsidized grain carried on subsidized cargo ships to be delivered to foreign countries where it was given to foreign peoples.  And the grain didn’t always go to the people in the countries to which it was delivered.

In the early 1990’s, the ship I was on delivered grain to Jordan.  This particular ship was a bulk carrier so the method of transferring the grain ashore was basically via huge vacuum cleaners that sucked the grain from the ship’s holds to big bins on the pier.  The grain was then bagged in burlap sacks with the Red Crescent insignia and loaded on trucks for transport….to Iraq. In case you don’t remember, the U.S. had a trade embargo against Saddam Hussein and his regime at the time. Yet, free American grain found it’s way into his hands.  That’s when I learned there are always ways around sanctions and embargoes and that the world was, indeed, a complicated place.

But my story, while related, is tangential to Tamny’s main focus:

[T]rade is about products for products.  An economically free Soviet citizenry could have exchanged what was produced by its people for all the grain needed in order to attain sufficient food supplies.  But as is well known, the problem during the Cold War was that the Soviet people weren’t free economically, and as such, didn’t have the domestic production necessary to exchange for global production of grain….That the Soviets were importing so little during the Cold War should have tipped off both sides to the simple truth that what was Cold wasn’t really War.  The Soviets plainly lacked the economy to conduct a war against the richest country in the world.

So while ‘The Americans’ remains an excellent show, the economics of its storyline this season leaves much to be desired.

Finally, Tamny also explains that President Trump’s trade advisor Peter Navarro seems to agree with ‘The Americans.’

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