Really? Really?? You Equate Shuttering Ex-Im With Smoot-Hawley?

by Don Boudreaux on November 9, 2015

in Crony Capitalism, Myths and Fallacies, Other People's Money, Seen and Unseen, Subsidies, Trade

Here’s a letter to the Wall Street Journal:

Richard Rogovin asserts that “[t]he death of the Ex-Im Bank will be construed by our friends and enemies as the further withdrawal of the U.S. from international markets” (Letters, Nov. 9).  This assertion is absurd.

Uncle Sam’s refusal to subsidize exports no more signals America’s withdrawal from international markets than would Wal-Mart’s refusal to keep pouring money into an unprofitable store signal that company’s withdrawal from retail markets.  Just as spending too much money keeping a retail store operating shrinks, rather than expands, a company’s ability to participate fully and productively in retail markets, spending too much money keeping exporters operating shrinks, rather than expands, a country’s ability to participate fully and productively in international markets.

Indeed, were it to continue to refuse to subsidize exports, Uncle Sam would signal to the rest of the world its increased willingness to follow the principles of free trade and, thus, to allow Americans to participate more freely than before in international markets.  Importantly, this increased participation would be without the burden of those distorting subsidies which not only directly damage the American economy but which also are used as excuses by foreign governments to further obstruct their citizens’ freedom to trade with Americans.

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


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