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Mercantilists are Prone to Perform ‘Incantations of Economic Humbug’

Here’s a letter to a reader of Cafe Hayek:

Mr. Joe Friedhoff

Dear Mr. Friedhoff:

Thanks for your e-mail and for reading Café Hayek.

You ask why I “ignore the serious policy arguments for the [Export-Import] Bank.”  Yet the only such allegedly serious argument that you identify – namely, that Ex-Im “ensures we export more” – is one that I’ve addressed many times at Café Hayek (for example, here).  It’s a bad argument, as is every other argument that I’ve encountered for reauthorizing that great geyser of cronyism.

Were I more vain I’d encourage you to explore Café Hayek carefully, for there I serve up (and link to) a host of different reasons to keep Ex-Im permanently shuttered.  Instead, though, I first recommend to you the extensive work of my Mercatus Center colleague Veronique de Rugy, and, second, leave you with this thought from economist Robert Higgs’s 2001 essay “Unmitigated Mercantilism“: “When my son was growing up, I lived in constant fear that one day he would come to me and ask, ‘Dad, why do we have an Export-Import Bank?’  Fortunately for me, that day never came.  If it had, I would have been compelled to make a painful choice: either to lie to him, telling him that we need the bank to promote U.S. exports and create jobs, or to offer him the bitter truth, telling him that the bank is just another contrivance to shift wealth from the politically weak and alienated to the politically strong and connected, while sanctifying the transfer with incantations of economic humbug.”

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