Mr. Francisco Sánchez
U.S. Under Secretary of Commerce for International Trade
Dear Mr. Sánchez:
In your press release yesterday you mention only one benefit of more open international trade – namely, more American exports (“Statement from U.S. Under Secretary of Commerce for International Trade Francisco Sánchez on World Trade Month 2013 ,” May 1).
With all due respect, although you were appointed by a president who boasts of his commitment to policies based on scientific consensus and unsullied by political pandering, your press release reads as if you are entirely innocent of the economic analysis of trade as you pander to popular prejudices against international commerce. Here are two instances of the many ways in which your press release offends basic economics.
Your exclusive focus on exports might be dismissed as a forgivable oversight were it not reinforced by your conclusion that “we have the best workers and the best businesses in the world, and if the playing field is level, America always wins.”
Are you aware of the principle of comparative advantage ? It’s foundational stuff. Explanations of it have been around, and widely accessible, since at least 1817 . Here’s a link to a famous Nobel laureate economist explaining its centrality.* If you were to become familiar with this principle you would learn that claims such as a country having “the best workers and the best businesses in the world,” or that trade is an event at which a country “wins,” are gobbledygook – on a scientific par with belief in the existence of phlogiston or the legitimacy of phrenology.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
* Paul Krugman, “Ricardo’s Difficult Idea “