Trump and the Economic Ignorance On Which He Surfs Are Both Appalling

by Don Boudreaux on January 10, 2017

in Seen and Unseen, Trade

Here I continue my correspondence with Mr. Vince Vogel:

Mr. Vince Vogel

Mr. Vogel:

You “celebrate” Donald Trump’s tweet threatening Toyota with a “big border tax” if it produces America-bound Corollas in Mexico rather than in the United States.  You “find refreshing … our President-elect getting tough on corporations which take and don’t give to America.”

Are you serious?  How is Toyota not ‘giving’ to us Americans when it offers to sell automobiles to us at prices that we find attractive?  Do Americans who voluntarily buy such cars not benefit?  Of course they do.  And do other Americans who, because of Toyota’s competition, pay lower prices for American-assembled cars not also benefit?  Of course they do.  That you fail to see that an increased flow of goods and services made available to Americans – especially at prices that reflect production costs as low as possible – raises Americans’ standard of living means that you fail to understand the most basic facts of economics.

You also fail to understand the nature of Trump’s bullying threats.  First, Trump threatened not only Toyota; he threatened also Americans who would purchase Mexican-assembled Corollas.  Mr. Trump’s “big border tax” would oblige these Americans to pay higher prices.

Second, suppose that Trump learns that in 2017 Americans intend to eat more meals prepared at home and fewer meals prepared at restaurants.  Would you “celebrate” if, in response, Trump tweets to every American household “NO WAY!  Eat at restaurants or pay big home-cooked-meal tax”?  Both cases – the home-cooked-meals case and the Toyota-in-Mexico case – feature actions that destroy or fail to create some specific jobs in an identifiable American industry.  Both cases feature outcomes that depend upon the voluntary actions of American consumers.  Both cases, in short, are economically identical.  Yet I suspect that you would be appalled at any tweet threatening Americans who choose to eat more home-cooked meals.  If I’m correct, you should be equally appalled at Trump’s tweet about Toyota producing cars in Mexico.

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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