Plane Ignorance

by Don Boudreaux on February 17, 2017

in Adam Smith, Crony Capitalism, Myths and Fallacies, Seen and Unseen, Trade

Here’s a letter to the Wall Street Journal:

While touring a Boeing factory today in South Carolina, Trump exclaimed that “[w]hen there is a level playing field, and I’ve been saying this for a long time, American workers will always, always, always win” (“President Donald Trump Praises Boeing, Suggests More Plane Purchases Coming,” Feb. 17).

It’s distressing that a U.S. president regularly spews such economic nonsense.

First, as Adam Smith made clear, the ultimate measure of the success of trade is not how many jobs it creates or how many domestic businesses it profits but, rather, how much it allows ordinary men and women to consume.  To see the truth of Smith’s point, ask: would you prefer to live in an economy in which everyone works long and hard but gets in return only an always-skimpy handful of goods and services for consumption, or in an economy in which relatively little work is required in order to afford everyone access to an ever-growing abundance of goods and services for consumption?  If you chose the latter, then you correctly understand that Trump errs in focusing on jobs (which are a means); he should instead focus on access to goods and services (which is the end).

Second, trade is neither a game nor a battle in which one party defeats the other.  All parties to voluntary trades come out ahead regardless of the tilt of the “playing field” (whatever this hackneyed phrase might mean).

Third, even on the most uneven of “playing fields,” American workers would find profitable opportunities to produce goods and services for export.  Opportunities to profitably specialize and export are determined by comparative advantage which, contrary to Trump’s suggestion, continues to exist even on the most lopsided and wobbly of “playing fields.”

It’s no crime for Trump to be completely ignorant of economics.  It is, however, a great crime for him to use the power of the U.S. presidency to impose coercive trade policies that are premised on his boundless ignorance.

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

And I didn’t bother to mention in this letter Trump’s express support for U.S. government subsidies – to the likes of Boeing – through that great geyser of cronyism, the U.S. Export-Import Bank.

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