Here’s a letter to the Washington Examiner:
Iain Murray and Julija Simionenko eloquently summarize many sound reasons why Uncle Sam should not punitively tax Americans who buy imports from countries that Uncle Sam declares to be ‘currency manipulators’ (“No currency manipulation rules in Pacific trade deals a good thing for Americans ,” Feb. 12). Here’s yet another reason: the same logic used by protectionists (such as Sen. Lindsay Graham and Rep. Sandy Levin) to justify the punitive taxation of Americans who buy imports made less costly because of foreign-governments’ “currency manipulation” dictates the punitive taxation also of Americans who buy imports made less costly because of foreign-governments’ “education manipulation,” “infrastructure manipulation,” or “public-health manipulation.”
Insofar as a foreign-government’s spending on education, infrastructure, and public health improves productivity in that country, such spending lowers the prices of that country’s exports – precisely the same consequence for Americans as that of a foreign-government’s currency manipulation. So unless protectionists are prepared to argue explicitly that Americans should be prevented from trading freely also with people whose governments spend on education, infrastructure, and public health – all of which expenditures are made also by Uncle Sam – protectionist protestations against alleged currency manipulation should fall on deaf ears.
Donald J. Boudreaux
Professor of Economics and Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
It’s true that
money currency manipulation is more likely to create economic inefficiencies than is government spending on education, infrastructure, and public health. And so in principle a case can be made that actions taken by government A to prevent government B from engaging in money currency manipulation will strengthen the global economy by strengthening the economy over which government B exercises dominion. But protectionists’ arguments against foreign-governments’ alleged currency manipulation do not come within twelve light years of such sophistication and depth. Instead, these arguments focus almost exclusively on the alleged loss of jobs and sales opportunities for current domestic workers and existing domestic producers. And given that economically ignorant focus, there is no more reason to pay heed to protectionists who blather on ignorantly and indignantly about “currency manipulation” than there is reason pay heed to protectionists who would complain about the alleged ‘unfair’ advantages created for foreign exporters by foreign-governments’ spending on public-health measures and systems of civil justice.