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Dr. Krugman Would Understand What Mr. Krugman Doesn’t

Here’s a letter to the New York Times:

Paul Krugman claims that “we’d have more jobs if we exported more and imported less” (“The Competition Myth,” Jan. 24).

Mr. Krugman forgets that the more we import the more we either export or receive as investments from foreigners: foreigners don’t ship valuable imports to us in exchange for dollars because these foreigners wish to hoard tiny monochrome portraits of dead American statesmen.

And consider that the Bureau of Economic Analysis reports that 55.2 percent of U.S. imports in 2010 were either industrial supplies or capital goods [HT Mark Perry].  That is, well over half of U.S. imports last year were inputs used to produce American-made outputs.  Put differently, 55.2 percent of American imports in 2010 were used by American workers to produce American outputs.

Clearly, it’s too simplistic to assert that reducing imports would create more jobs in America.

Donald J. Boudreaux