How Not to Restore American Industry

"For every complex problem,” H. L. Mencken said, “there is an answer that is clear, simple and wrong.” Then there are answers that aren’t even wrong, but merely irrelevant—for example, the notion that a weaker U.S. dollar exchange rate will create more U.S. manufacturing jobs. This notion has motivated Senators Tammy Baldwin (D-Wis.) and Josh Hawley (R-Mo.) to introduce legislation to compel the Federal Reserve to depress the dollar’s exchange rate to achieve current account balance. Under their “Competitive Dollar and Prosperity Act,” the Federal Reserve would be required to depress the dollar—for example, by taxing foreign investment in U.S. assets—and bring the U.S. current account into balance within five years."