Here’s a letter to a new Cafe Hayek reader:
Mr. Cal Clayton
Thanks for your e-mail.
Expressing your “support [for] President Trump’s at last standing up for us by not giving it all away in trade deals,” you agree with Trump that whenever the U.S. government reduces tariffs and other import restrictions it ‘gives away’ – or as you also say, it “concedes” – something to foreigners. You further agree with Trump that such ‘concessions’ are justified only if we in exchange are permitted by foreign governments to export more to their citizens.
With respect, such an understanding of trade is completely backwards, upside down, and inside out.
How can it possibly be that “standing up for us” involves arranging for us to produce more for others’ consumption and, in exchange, for others to produce less for our consumption? A real-estate agent who ‘stood up’ for you in this manner would bargain up the amount of money you pay for a new home and bargain down the square footage and amenities that you receive in exchange for the unnecessarily high price you pay.
If you understand that such a real-estate agent would make you worse off rather than better off – if upon learning of this agent’s ‘bargaining’ strategy you would not only fire her but also suspect that she’s a double-agent secretly working not for you but for the home seller – then you should understand that insofar as Trump succeeds in his bargaining he will make us Americans worse off rather than better off. And the fact that Trump sincerely believes that his ‘bargaining’ strategy will increase rather than reduce our wealth matters not one whit more than if you were to discover that this real-estate agent of yours sincerely believes that she improves your well-being by ‘bargaining’ for you to buy at a price as high as possible a home that is as small and as shoddy as possible.
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