Here’s a letter to the New York Times:
The caption to a photo accompanying Greg Mankiw’s superb essay on the benefits of free trade reads “The 18th-century economist Adam Smith wrote that nations can benefit as much from imports as from exports, turning the conventional wisdom on its head” (“Economists Actually Agree on This: The Wisdom of Free Trade ,” April 26).
The text of Mr. Mankiw’s essay assures me that he did not write this caption.
While Adam Smith did indeed turn conventional wisdom on its head, he emphatically did not write that nations can benefit as much from imports as from exports. Instead, he countered the conventional wisdom by showing that nations benefit only from imports. Smith understood correctly that exports are no benefit at all; they are only a cost. Exports are the price paid for imports. To write that “nations can benefit as much from imports as from exports” is akin to writing that households can benefit as much from the groceries they receive from supermarkets as from their spending the money necessary to buy those groceries. Like Mr. Mankiw, Adam Smith would never write such nonsense.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030