Here’s a letter to the New York Times:
In midst of sensibly analyzing the recommendations of President Obama’s fiscal commission, Glenn Hubbard trips over a slab of mercantilist malarkey when he writes “To meet the nation’s fiscal challenges, we need to refocus our economic activity – primarily with less reliance on consumption and more on investment and exports” (“Left, Right and Wrong on Taxes,” Nov. 16).
Vigorous economic growth does indeed require investment, but the nationalities of the consumers to whom the fruits of this growth are directly sold – no less than the nationalities of the persons whose savings fund the investment – are irrelevant. In principle, economic growth sufficient to “meet the nation’s fiscal challenges” requires no increase in exports. What is required are policies that spur entrepreneurs and investors to produce more goods and services demanded by consumers; whether the persons who directly consume the increased outputs of American firms live in Jakarta or in Jacksonville is of little significance.
In practice, economic growth is indeed likely to lead to more exports – which is perfectly fine – but government officials need not design policies to achieve this outcome. Quite the contrary, for policies aimed at increasing exports inevitably become vehicles for erecting trade barriers.
Sincerely,
Donald J. Boudreaux
