Free trade and openness to immigration bring enormous macroeconomic benefits to all countries. Therefore, from a utilitarian point of view, these policies should be pursued because they promote the greatest happiness of the greatest number. However, these policies do not necessarily promote the wellbeing of all citizens within particular countries.
The complexity of social events makes a precise determination of the chain of causation difficult. While the Biden administration’s policies—both foreign and domestic—have played a role in the recent surge of oil prices, there are many other factors that are most likely behind this phenomenon.
The main problem with income inequality is the perception of income inequality. If our view of reality is pessimistic and incomplete, we might unduly worsen our own real-world circumstances by, say, adopting a wealth tax. Populists exploit the widespread perception that inequality is a dire threat to people’s well-being. But contrary to what they claim, capitalism is not broken—at least, not until their unreasonable policy proposals become reality.
It is unlikely that rate cuts will generate productive investments at a time when companies prefer to save rather than to invest not due to high costs of borrowing and “high” interest rates but because of the uncertainty associated with the pandemic.
China’s holdings of the U.S. debt do not provide it with overarching economic influence over the United States; they are merely how Beijing runs a trade surplus with America (to ensure the value of China’s exports exceeds the cost of its imports). China’s debt holdings do not provide any political leverage to China, nor does their sell-off present a threat to the American economy.
The secret of capitalism’s success is the inherent efficiency of the distributed process of decision-making and its ability to adapt to changing conditions. This is why centralized systems fail, while open and flexible and decentralized societies succeed.
China’s economic growth in recent decades has been impressive. In recent years, however, experts have begun to question the reliability of China’s GDP statistics. The way China collects and processes economic information is different from conventional methods, and therefore we should take into consideration this fact when comparing the GDPs of China and other countries.
China purchases US government bonds not to accommodate US needs; instead, Beijing does so to continue running the current account surplus to provide domestic employment and economic stability.