Energized by Free Trade

by Don Boudreaux on April 29, 2011

in Seen and Unseen, Trade

29 April 2011

Mr. “Mikiesmoky”

Dear Mr. “Mikiesmoky”:

I don’t know how I got on your e-mail list; perhaps you wish to convert me to your protectionist creed.  If so, you’ll fail as long as you write things such as the following: “When a consumer, within the U.S., expends energy by purchasing a television for $1,500, about $1,000 of that energy is transferred to China.  When this energy is transferred offshore, it results in a reduction of our national energies.”

Nonsense.  Imports don’t ‘reduce’ our ‘national energies’ by ‘transferring’ them to foreigners.  Instead, imports conserve our energies and channel them into more productive uses.

Are your ‘household’s energies’ reduced when you buy food from Safeway rather than grow food yourself?  Do such purchases ‘transfer’ your ‘household’s energies’ to Safeway?  Of course not.  By importing food into your household from Safeway, you save ‘energy.’  You then have more energy available to produce other things – things whose production consumes less of your ‘energy’ per unit produced than would the food you’d produce yourself if you foolishly stopped importing food into your household from Safeway.

So your story is backwards.  Free trade conserves our ‘national energies’ so that they can be used where they are most needed, namely, producing goods and services that foreigners cannot produce as inexpensively as we can.  Protectionism wastes those energies, making us poorer.

Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA 22030


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