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What If Physics Were Done Like Mercantilist Economics?
Posted By Don Boudreaux On July 12, 2013 @ 7:41 am In Crony Capitalism,Seen and Unseen,Subsidies | Comments Disabled
Here’s a letter to the Wall Street Journal:
Mistakenly asserting that taxpayer backing of the Export-Import Bank is a boon to America’s economy, University of Wisconsin nuclear engineer Michael Corradini highlights the fact that he himself “has seen the Ex-Im Bank support a United Arab Emirates project with $2 billion in financing that will end up providing about 5,000 U.S. jobs through companies such as Westinghouse, Lightbridge, ConverDyn and CH2M Hill” (Letters , July 12).
No one doubts that government pumping of taxpayer-subsidized resources into the factories of corporation X enables corporation X to hire more workers and to produce more output. Yet sensible people understand also that government cannot pump resources into corporation X without pumping those resources away from other uses. Sensible people, therefore, do not conclude that the mere observable existence of corporation X’s taxpayer-fueled activities is evidence that those activities are an economic boon.
Prof. Corradini’s claim to the contrary is the economic equivalent of the argument of someone who, not seeing the fuel-storage tanks buried beneath the ground at a gasoline station, concludes that the fuel pumped into cars at that station materializes miraculously from nowhere.
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
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