Here’s a letter to a frequent correspondent:
Mr. Joe Friedhoff
Dear Mr. Friedhoff:
Thanks for your latest e-mail.
You again insist that foreign-governments’ subsidization of their countries’ exporters “requires” that the U.S. government use the U.S. Export-Import Bank to subsidize American exporters.
In our correspondence you’ve yet to acknowledge, much less to address, economists’ argument that such subsidies by foreign governments weaken rather than strengthen their economies – and, therefore, that what you call “retaliatory subsidies” by Uncle Sam weaken rather than strengthen America’s economy. (Talk about a race to the bottom!)
You say that you are “a committed conservative.” So I ask you to consider the following scenario. Suppose the government of a foreign country gave to owners of factories there the power to seize outright whatever residential lands and buildings there those factory owners deem they can somehow use to better enable them to produce more goods for export to America. Do you suppose that such a grotesque violation of property rights – such an atrocious abrogation of the rule of law and of the principles of a market economy – would make that foreign economy stronger? And do you suppose that this pro-business policy followed by that foreign government would “require” that Uncle Sam (quoting you) “restore a level playing field” by granting to owners of factories in America the same power to seize outright whatever residential lands and buildings in America these American factory owners deem they can somehow use to better enable them to produce more goods for export from America?
I trust that you’d oppose such a “retaliatory” policy. Yet if so, then you should oppose also the Ex-Im Bank. Ex-Im does exactly what the seizing business people do in the above hypothetical example, except on a smaller scale and with curtains and stage props erected by politicians to mask the ugly reality that Ex-Im gives some American businesses nothing more noble than the power to greedily seize the property of others for their own narrow purposes.*
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
* UPDATE: Another difference just occurs to me: Unlike in the hypothetical, Ex-Im allows some U.S. producers to directly confiscate not only residential properties, but the properties also of other American businesses – thus making Ex-Im even less likely that Mr. Friedhoff supposes to “strengthen” America’s businesses.
Mr. Friedhoff tells me that he was on the verge of becoming a financial supporter of GMU’s Mercatus Center until he found me to be “stubbornly opposed to the best interest of America.” I regret my home institution losing his financial support, but I would regret immeasurably more my home institution losing its principles and good sense.