Costs Are Not Benefits

by Don Boudreaux on June 27, 2013

in Myths and Fallacies, Trade

Here’s a letter to my friend Bryan Riley, who is the Jay Van Andel Senior Policy Analyst in Trade Policy at the Heritage Foundation; Bryan’s suggestion came in an e-mail to a trade-scholars’ listserve maintained by Andy Roth:

Dear Bryan:

You suggest that the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation and Trade summarize its stance on trade-promotion with the simple 27-word declaration “The federal government should eliminate all U.S. trade barriers so people in other countries can earn more dollars to spend on U.S. exports of goods and services.”

I like it!  But with respect, I have what I think is an even better 27-word formulation: “The federal government should eliminate all U.S. trade barriers so that Americans can get more for the dollars they spend on U.S. imports of goods and services.”

Politicians too often speak as economic illiterates.  As such, they routinely reinforce the popular but mistaken notion that trade’s successes are measured in more exports while trade’s costs are measured in more imports.  We economists, in contrast, should seize every opportunity to emphasize the reality that, just as a household prospers more the greater are the goods and services it receives (imports) from others in exchange for whatever it sells (exports) to others, a nation prospers more the greater are the goods and services it receives from others in exchange for whatever it sells to others.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

….

It’s not too much of an exaggeration to say that the most important task of economists is to constantly and tirelessly expose the fallacies of mercantilism – fallacies that come so naturally to people who are either un- or poorly educated in economics.

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