Especially Creative Destruction Is Especially Creative

by Don Boudreaux on April 14, 2017

in Creative destruction, Growth, Seen and Unseen, Trade

Here’s a letter to the Wall Street Journal:

Professors David Autor, David Dorn, and Gordon Hanson defend their finding that U.S. trade with China from 1990 to 2007 was unusually disruptive (Letters, April 13).  Yet even if – contrary to other evidence – their finding is correct, it doesn’t justify their conclusion that government should temper such trade in the future.

Trade that is unusually disruptive for some workers is trade that is unusually beneficial for consumers and other workers.  Abnormally large and widespread price cuts in domestic industries that compete with imports mean both abnormally large gains for consumers of those products and the release of resources for the creation of new industries and jobs elsewhere in the domestic economy.

The years covered by professors Autor’s, Dorn’s, and Hanson’s study were among the most economically dynamic in American history.  For example, they witnessed the birth of companies such as Google, Facebook, and Netflix, and the revival of Apple.  Supermarkets stocked wider assortments of foods and dry goods.  The quality and variety of beer and wine exploded.  Ditto for coffee and tea.  Fracking took off.  Cellular telephony went from rare to ubiquitous.  Commercial airfares fell by about a third while safety rose.  These and other advances require the release of resources from older industries – a release made possible by expanded trade.

Economists’ greatest service is to help the public see economic consequences that otherwise remain unseen.  It is, therefore, especially regrettable that economics professors Autor, Dorn, and Hanson themselves seem to be blind to the full benefits of trade.

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

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