Exports, Imports, and Green-Red Herrings

by Don Boudreaux on August 21, 2007

in Environment, Myths and Fallacies, Trade

Today’s Wall Street Journal published two letters defending free trade with China.  The first is written by me; I remind people that imports are benefits and exports are costs.  Seems to me to be a point too obvious to warrant mention, but the moment people start thinking of “national” economies, ability to think straight too often disappears.

The second is by my friend the excellent economist (and blogger at Division of Labour) Frank Stephenson who exposes green-red herrrngs.

Peter Navarro’s Aug. 13 letter to the editor accuses the 1,000-plus economists (including yours truly) who signed the petition opposing trade sanctions against China of overlooking Beijing’s beggar-thy-neighbor policies. Not so. Save for the counterfeiting of Western goods, every offense that Mr. Navarro accuses China of committing against Americans benefits Americans. If Beijing truly is, for example, subsidizing Chinese producers, the resulting lower prices are a gain to American consumers no less than if the lower prices stemmed from a technological breakthrough in China.

By failing to see that imports, rather than exports, are the ultimate goal of trade, it is Mr. Navarro who spreads beggar thy-neighbor fallacies.

Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Fairfax, Va.


Mr. Navarro claims that 1,028 economists (including me) who oppose protectionist legislation against China ignore China’s “extremely lax environmental and health and safety regulations that encourage the rest of the world to export their pollution and sweatshops to China via offshoring.”

This argument is a red herring. Research on the environment and globalization by Jeffrey Frankel of Harvard’s Kennedy School of Government finds, “little statistical evidence, on average across countries, that openness to international trade undermines national attempts at environmental regulation through a race to the bottom effect. If anything, favorable gains from trade effects dominate on average, for measures of air pollution such as SO2 concentrations.”

E. Frank Stephenson
Chairman, Department of Economics
Berry College
Mount Berry, Ga.


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