Here’s a letter to the New York Times:
Discussing expanded American trade with the Chinese, President Obama told a business group in Honolulu “those are potential customers for us in the future” (“Obama Sees an Opening on China Trade,” Nov. 13).
Yep. And a bigger pool of customers is indeed good because in many industries it encourages larger-scale investments and R&D projects that allow firms to produce and sell at lower per-unit costs than are possible with only a smaller pool of customers.
But with his comment Mr. Obama singled-out the least-important benefit of American trade with China. Had he instead singled-out the most-important benefit he would have said instead about the Chinese people: “those are potential producuers for us in the future.”
To make this point is not to cavil. It is to warn against being misled by the flawed mercantilist notion that trade’s benefits lie in what we produce for others. In fact, trade’s benefits lie overwhelmingly in what others produce for us. Emphasizing the growth of exports fertilizes the soil on which the greedy, grasping, destructive weeds of protectionism grow.
Donald J. Boudreaux