Thread by @Noahpinion

1/In a @bopinion post today, I evaluate Elizabeth Warren's new plan for "economic patriotism".

Everyone by now knows that I'm a huge fan of Warren, but I tried to be realistic about the plan's weaknesses as well as its strengths.

bloomberg.com/opinion/articl…

2/Here is the plan.

medium.com/@teamwarren/a-…

3/First of all, this plan shows that the free-trade consensus has decisively broken down in Washington.

Between, Trump, Bernie, Schumer, and now Warren, there is essentially bipartisan consensus that the era of unquestioned free trade policy is now over.

4/But that doesn't mean everyone has the same ideas about HOW to move away from dogmatic free traderism.

Trump of course loves tariffs and trade wars. Bernie focused on canceling trade agreements.

Warren's plan is far smarter and more visionary than anyone else's so far.

5/The thing I like best about Warren's plan is the idea of EXPORT PROMOTION.

Promoting exports is so, so much smarter than tariffs.

bloomberg.com/opinion/articl…

6/Export promotion isn't just about trade deficits. It's about productivity.

7/In fact, my favorite form of export promotion is what people call "export discipline". It's when you push companies to export, but you don't support the ones that fail.

bloomberg.com/opinion/articl…

8/Warren would also create a unified, powerful Department of Economic Development - something I've suggested in the past!

bloomberg.com/opinion/articl…

9/OK, so what DON'T I like about Warren's plan?

"Buy American".

Reserving federal contracts for American companies just gives these companies a crutch, discourages competition, encourages waste, and raises infrastructure costs.

10/Anyway, now let's talk about the trickiest part of the plan: currency devaluation.

Warren wants a weaker dollar. That would be good for correcting global imbalances.

But how are we going to GET a weaker dollar? Therein lies the rub.

11/We could devalue the dollar by having the Fed create a bunch of dollars.

But this complicates the Fed's mandate (it is already supposed to fight both unemployment and inflation)! It would lead to a less independent monetary policy.

12/We could also lean on other countries to stop using the dollar as the reserve currency.

But this is a risky move.

13/The best solution would be to get other countries to stop undervaluing their currencies against the dollar (cc @Brad_Setser), but if China doesn't float the yuan, countries that compete with China are going to be too afraid to do this.

14/In other words, if you want economic patriotism to really work, you're going to have to confront China.

I want @ewarren to talk more about how she would do that!

15/In any case, Warren's plan has some flaws, but it's the smartest and most comprehensive, visionary export promotion plan I've yet seen.

It's about time.

(end)

bloomberg.com/opinion/articl…