The January 5th edition of The Economist reports that China’s recent economic growth is less dependent upon exports than is commonly believed. Reflecting on the widespread mercantilist myth that countries can prosper by exporting as much as possible and importing as little as possible led me to send the following letter to The Economist:
It’s no surprise that “Contrary to popular wisdom, China’s rapid growth is not hugely dependent on exports” (“An old Chinese myth,” January 5). Just as no individual prospers by giving the fruits of his labor to others in exchange only for pieces of paper that he never spends, no group of people – including the Chinese – prospers by such a foolish strategy.
Exports are costs. They promote economic growth only if, in return, the exporters receive goods, services, and assets that improve their living standards and their capacity to produce. Any country that insists on exporting its produce and importing in return as little as possible is on a certain path to poverty.
Donald J. Boudreaux
Yes, yes. Accumulating money might be a prosperity-enhancing strategy — but only if that money is eventually spent. If it is never spent, all the exports shipped abroad in order to gather all this money turn out to be gifts given to foreigners. Any people foolish enough to permit their government to enforce such a strategy will enrich others and impoverish themselves.