Here’s another letter to my insistent correspondent Nolan McKinney:
Mr. Nolan McKinney
Mr. McKinney:
Unhappy with the reasons I give for advocating free trade, you insist that “our government must … protect our producers from watching foreign governments steal away their comparative advantage.”
First, comparative advantage is not held as property. This fact is true especially given that no one has a comparative advantage in the abstract. Any such advantage is always one that is simply relative to – compared to – some other producers. No one owns his or her current comparative advantage.
Second, if a foreign government does intervene abroad in a way that turns an industry at which ‘we’ once had a comparative advantage into one at which ‘we’ now have a comparative disadvantage, that very same foreign-government action also turns at least one industry at which we once had a comparative disadvantage into an industry at which ‘we’ now have a comparative advantage.
Third – and most fundamentally – let’s say that Beijing subsidized the successful development of a pill that cures all cancers. The pill need be taken only once, it has no ill side-effects, and it is sold globally by Chinese pharmaceutical companies for $10 apiece. This pill would destroy the comparative advantage long enjoyed by American oncologists. Do you believe that Uncle Sam should obstruct Americans who are victimized by cancer from having access to this pill on the grounds that its development is the result of foreign-government intervention that destroyed the comparative advantage of some very high-wage American workers? If not, why do you think that Uncle Sam should obstruct Americans who are victimized by, say, unnecessarily high prices of steel or of solar panels from having access to steel and solar panels whose prices are made lower on global markets by foreign-government subsidies?
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
