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A Soup of Confusion

Posted By Don Boudreaux On December 21, 2010 @ 5:32 pm In Growth,Myths and Fallacies,The Economy,Trade | Comments Disabled

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 [1],” 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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