Here’s a letter to the Washington Post (corrected):
Bruce Katz and Jonathan Rothwell usefully expose dangerous myths about U.S. exports (“Five myths about U.S. exports,” Sept. 5). But these authors themselves swallow a larger myth about exports – namely, the claim that we Americans “should increase our exports” because “Our relatively low export levels represent a lost economic opportunity.”
Suppose that in 2010 a firm in Buffalo produces $1 million worth of baseballs for sale to consumers in Toledo. If in 2011 this firm produces identical balls but sells them instead to consumers in Toronto, U.S. exports would rise but there would be no corresponding gain in economic opportunity.
If Messrs. Katz and Rothwell have in mind raising U.S. exports only by American firms selling more to foreigners without selling less to fellow Americans, their claim still is mistaken – for two reasons. First, increased “economic opportunity” can come from American producers selling more to Americans no less than from selling more to foreigners. Consumers’ nationalities are economically irrelevant.
Second, any such increased foreign demand for U.S. exports could well result from foreigners reducing their investments in America in order to spend more on U.S.-made goods and services. This increased demand for U.S. exports, although it would reduce America’s trade deficit, would not necessarily create more “opportunity” than that which is destroyed by the reduced investments.
Donald J. Boudreaux