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The Year of the Mercantilist

Here’s a letter to the New York Times:

I applaud Pres. Obama’s endeavor to further liberalize trade between America and Asia, but his explanation of his efforts reveals that he doesn’t know what he’s doing economically (if not politically) (“Exporting Our Way to Stability,” Nov. 6).  Most worrying is this sentence: “We want to expand our trade relationships in the region, including through the Trans-Pacific Partnership, to make sure that we’re not ceding markets, exports and the jobs they support to other nations.”

When international trade expands, some home markets and jobs are necessarily “ceded” to “other nations.”  It is in the very nature of expanding trade that foreign producers specialize in supplying to the home market some goods and services that previously were supplied by domestic producers, and vice-versa.

The mercantilist tone of Mr. Obama’s essay – its bear-like embrace of the fallacy that trade’s success is measured by how much the home country exports rather than by how much it imports – suggests that any trade agreements that he reaches with other governments will do far less to increase the prosperity of ordinary Americans than to enhance the monopolistic privileges and profits of politically influential U.S. corporations and unions.

Donald J. Boudreaux