Deer Steaks and the Right Sock

Deer Steaks and the Right Sock

I am a deer hunter or given last year it may be more appropriate to call me a deer observer. I can process the deer myself. In the basement at the farm I have a set of butcher’s knives, a meat saw, a metal table and a refrigerator with meat hooks. Despite all of this, each time I decide to process a deer, I end up saying that its worth paying the processor. He charges me $80 and I pay him. That means I have a trade deficit with my butcher. It is highly unlikely that my account will ever be zeroed out or even in surplus, since to date he has not needed a bank consultant on director duties a fair lending analysis. Yet my trade deficit has not made me worse off. Quite the contrary, it has made be better off. Rather than having unsightly chunks of meat I have neatly packaged steaks, roasts and ground and he has $80 for his labors. BTW, my uncle used to process his own deer. He labeled them “dear stakes.”

I could also not call a plumber when I my septic system backed up. I could not have called an electrician when my circuit breakers kept triggering. I could have gone up on my roof to fix the leak last summer. However, I call folks who are specialized in each one of those areas and paid them. That meant I did not flood the driveway. I did not set the house on fire and I did not have call 911 after falling off the roof. Rather I expanded my trade deficits and again I became better off rather than worse off. In economics, we call this comparative advantage. Trump thinks comparative advantage is a bad thing if the advantage lies with foreigners. I guess the patriotic thing to do is ignore foreign comparative advantage, pay more for goods and be worse off. Again, Wharton should rescind Trump’s degree. 

I have a hole in my sock, darn it! I am reasonably confident that I could also get the material and make my own socks. But why do this when it would be cheaper to just go buy the finished product? The Chinese city of Zhuju is the sock capital of the world. It has 300,000 workers producing over 25 billion pair of socks per year. The socks are about 25 cents a pair. Thirty percent of them are shipped to the US or should I say, were shipped to the US. With the 145% tariff on all Chinese goods – except those sold by Tim Cook – the socks bound for the US would be sold at a loss by the importer. So the sock makers have to find other markets. I may be forced to start darning my socks, wearing mismatched ones or even trying to make my own. But under no circumstance will I resort to wearing no socks like some of my white friends did in college. Do they still make Bass Weejuns?

I don’t think that the sock makers of Zhuji are going to move their factories and 300,000 workers to the US – do you? Sure we can get our socks from Honduras and El Salvador.  We may have to pay a bit more. We may have less to choose from and we may even see empty racks in our stores. I don’t think that Premier Xi is going to bow to Trump to keep some sock producers from going out of business. More likely, the Chinese government will subsidize the affected companies – just like Trump says he will subsidize American farmers who will lose their Chinese soybean markets.

Do you know that if you first put on your socks on the left foot, the other sock will always be on the right foot?