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Iowans Grow Cars in Cornfields

Posted By Don Boudreaux On November 6, 2011 @ 12:45 pm In Balance of Payments,Myths and Fallacies,Seen and Unseen,Trade | Comments Disabled

Here’s a letter to FoxNews.com:

Peter Morici claims that a trade deficit is “lost purchasing power” (“What’s Holding Back Job Creation [1],” Nov. 4).  He’s hopelessly confused [2].

Evidence of this confusion abounds.  In the middle of his op-ed Prof. Morici rightly laments businesses’ “[i]nadequate investment in labor saving technology,” yet he ends his op-ed by complaining that foreigners (especially the Chinese) ship too many goods to us in exchange for what we ship to them.

Say what?  Because labor-saving technology is indeed good, then trading arrangements that enable us Americans to get more imports for fewer exports are also good.  If, say, American electronics producers would demand two hours of my economics lectures in exchange for one of their flat-screen TVs, while foreign producers demand only one hour of my lectures, I save labor by purchasing the foreign-made TV.  I’m made richer by buying my TV from abroad.  (And I’ll save even more labor – I’ll be made even richer – if tomorrow the foreign producer lowers the price of its TV to only 30 minutes of my lecturing.)

Trade itself is a labor-saving technology, to be applauded no less enthusiastically than we applaud mechanization and other labor-saving technologies.

Sincerely,
Donald J. Boudreaux

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[1] What’s Holding Back Job Creation: http://www.foxnews.com/opinion/2011/11/04/whats-holding-back-job-creation/

[2] He’s hopelessly confused: http://cafehayek.com/2011/10/utterly-deficient-analysis.html

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