Weekend Economists Could Have Danced All Night! October 16-18, 2015

[Demeter]

31. This Congressman Thinks We Can Fix The Economy By Drinking Beer

WARNING: BEER IS ONLY A TEMPORARY FIX--NO MATTER WHICH PROBLEM YOU APPLY IT TO...
AND IT IS SELF-LIMITING, TOO, AS OPPOSED TO BEING AN ORGANIC GROWING SOLUTION...

http://www.huffingtonpost.com/entry/peter-defazio-craft-beer_56215319e4b0bce34700aa00?ir=Business&section=business&utm_hp_ref=business



If you want to help the American economy, you should drink more fancy-pants beer, according to Rep. Peter DeFazio (D-Ore.).

"One of the great things about drinking craft beer is you're helping deal with our trade deficit," DeFazio told HuffPost. "American-made American product, homegrown, as opposed to all these other beers, which are foreign-owned and you're contributing to our trade deficit every time you drink one."

DeFazio was drawing a contrast between local breweries and the cheap, crappy swill of big-name brands such as Miller and Budweiser. (Cheap, crappy beer is objectively superior to fancy-pants craft beer, your host contends.) DeFazio -- a founding member of the House Small Brewers Conference -- is, of course, just having some fun. He isn't quite right on the technical merits of his economic case, but he seems to be correct in spirit (pun intended). Even though Miller and Anheuser-Busch are owned by foreign conglomerates, High Lifes and Buds are still brewed and bottled stateside. Those bottles aren't imports, and thus don't affect the trade deficit at all. But drinking foreign-owned beer does have an effect on the current account deficit -- another measure of international trade flows. The share of the profits from Miller and Anheuser-Busch that leave the country have a small negative effect on that metric, while domestically owned craft breweries that keep all of their profits in the U.S. do not.

Theoretically, running big current account deficits can harm the economy. Many economists believe doing so can lead to long-term drags on growth and financial dysfunction. If other countries hoard the dollars they receive, it can drive up the relative value of U.S. currency, which sends domestic manufacturing jobs abroad.The U.S. has been running a relatively large current account deficit for decades. But this is mostly an issue with countries that do huge amounts of trade with the United States, such as Japan and China. Anheuser-Busch InBev, which owns Budweiser, is a Belgian-Brazilian conglomerate, while SABMiller is a South African company.

To sum up: If you are partial to cheap, crappy beer, then you don't have to feel bad about the trade deficit any more than your snooty craft beer friends. They can, however, troll you on the current account deficit. You're kind of hurting America, even though I toast your taste in beer.

It may or may not help, but we're going to give it our all.

THAT'S THE SPIRIT!