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Economists Without Borders

Here’s a letter sent yesterday to the producers of the radio program “Marketplace”:

You report that the Union of Concerned Scientists worries about the fact that “11 states each spend more than a billion dollars a year importing coal from other states” (“States spend big on importing coal,” May 18).  These scientists conclude that states whose residents import a good deal of energy from outside of their respective states are not getting energy efficiently – that these energy imports are evidence of a serious problem that policymakers should correct.

These scientists jump to an unscientific conclusion.  Nothing in economics (or any other science) suggests that energy purchases and sales are efficient and appropriate only, or even chiefly, when buyers reside in the same jurisdiction as sellers.

I’ll bet, for example, that each member of the Union of Concerned Scientists imports nearly 100 percent of his or her household’s energy from suppliers located outside of that household’s county.  Should this fact cause us concern?  Would energy be supplied and used more efficiently or appropriately if each American used only energy produced within the county where he or she resides?  Or – even more in keeping with the spirit of the Union’s notion – if each American household used only energy produced by that household?  Of course not.

It’s wholly unscientific to treat political borders as defining any relevant or meaningful boundaries for economic transactions.

Donald J. Boudreaux

(HT to Frank Stephenson at Division of Labour.)

The title of this post I owe to my friend Sheldon Richman.