A Soup of Confusion

by Don Boudreaux on December 21, 2010

in Growth, Myths and Fallacies, The Economy, Trade

Here’s a letter to the Washington Post:

E.J. Dionne writes, “if we offshore the manufacturing that results from home-grown innovation, we will eventually lose our advantages in innovation itself” (“Even progressives need CEOs,” Dec. 20).

Mr. Dionne is confused.  The chief source of the loss of manufacturing jobs over the past several decades is not offshoring; rather, it’s the very innovation that Mr. Dionne praises.

In other words, “the manufacturing that results from home-grown innovation” is manufacturing that relies heavily upon the intensive use of machines, chemical processes, and other non-human means of production.  And one essential pre-requisite for much of this labor-saving innovation is global trade that expands the size of markets and, thus, increases the potential returns to innovation.

If Mr. Dionne and his fellow “Progressives” really wish home-grown innovation to continue, they should stop lamenting the loss of manufacturing jobs and other consequences of progress – and start championing free trade.

Sincerely,
Donald J. Boudreaux

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