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OMG! We’re Not Paying Enough!

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Here’s a letter to the Wall Street Journal:

Dennis O’Connor asserts that free trade now harms America because “U.S. goods and services imports from China were triple U.S. exports to China in 2015, $498 billion versus $161 billion” (Letters [2], August 16).

Let’s play along with Mr. O’Connor’s failure to understand that in a world of many countries there is no more reason to expect that America will sell to China the same dollar amount of products that it buys from China than there is to expect that in a world of many people LeBron James will sell to his local supermarket the same dollar amount of products that he buys from his local supermarket.  And let’s be clear about just what Mr. O’Connor complains – namely, that we Americans get more goods and services from the Chinese than we give in exchange.

I’ve some questions for Mr. O’Connor to probe the sincerity of his evident belief that people are harmed whenever they get in exchange more than they give.  When your employer, Mr. O’Connor, offers you a ten-percent raise, do you demand that your employer also increase your work hours by ten percent, so that your hourly pay remains unchanged?  When your local liquor store cuts by 17 percent the price of a six-pack of your favorite beer, do you demand that the store remove one of the bottles, so that you get only a five-pack?  When you buy a new computer that, because of Moore’s Law, has twice the computing power of your last computer, do you demand to pay for your new computer twice the price that you paid for your last computer?  And whenever the value of your stock portfolio rises, do you donate all of your capital gains to your stockbroker to ensure that when you sell your assets you receive in return no more than what you paid for them?

If Mr. O’Conner answers “no” to any of these questions, he should reconsider his odd belief that we Americans are harmed if the value of the imports that we receive exceeds the value of the exports that we give as payment for these imports.

Sincerely,
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

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