Carter As Clueless As Trump

by Don Boudreaux on May 12, 2017

in Crony Capitalism, Myths and Fallacies, Seen and Unseen, Subsidies, Trade

Here’s a letter to the Washington Post:

Defending the Trump administration’s scheme to punitively tax Americans who buy lumber from Canada, Jimmy Carter confirms that his grasp of economics is just as feeble as is Donald Trump’s (“Trump is right. Canada’s lumber trade practices are unfair.” May 10).

First, Mr. Carter fails to understand that we Americans are enriched whenever the prices we pay for imports fall, whether these falling prices result from foreign-government subsidies or from improvements in foreign-producers’ methods of production.  The people made poorer by Canadian-government subsidies of Canadian lumber production are Canadians, not Americans.  And the people harmed by U.S. “retaliation” are Americans, not Canadians.

Even worse is Mr. Carter’s claim that “With moderate adjustments in management, there is enough timberland in the United States to supply the total American market with lumber.”  This statement reveals Mr. Carter’s appalling ignorance of that key economic consideration, cost.

The question here is not: Is America’s self-sufficiency in lumber physically possible?  (Of course such self-sufficiency is possible.)  Instead, the question is: Is America’s self-sufficiency in lumber cost-effective?  For America to be self-sufficient in lumber – or even just closer to self-sufficiency in lumber – requires greater use of American land, labor, and other resources to produce lumber.  An unavoidable consequence of increased lumber production in America is less American land, labor, and other resources available to produce wheat, tourism, aluminum, and other goods and services.

Therefore, government policies that artificially increase Americans’ production of lumber artificially decrease Americans’ production of other goods and services.  For these other goods and services, we are thus made less dependent on ourselves and more dependent upon foreign suppliers.  And we are made poorer.

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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