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And Yet Another Open Letter to Trump

Mr. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

Pointing yet again to the U.S. trade deficit with China you bellowed that, on trade, China is “killing us.”

In what way are we being “killed” by non-Americans investing lots of money in the U.S.? A U.S. trade deficit, after all, means that non-Americans are investing more in the U.S. than Americans are investing abroad. (By the way, America’s trade deficit with China – a figure to which you incessantly point – is a figure utterly without meaning. But let’s here overlook that particular error of yours.)

Tell me: when on May 18th, 2012, investors responded to Facebook’s IPO by pouring $16 billion into that company, were investors “killing” Facebook? Should Mark Zuckerberg have taken steps to reduce – to $0 if possible – the amount of investment funds received by Facebook? And was Facebook’s financial position weakened and its future imperiled by its receipt of this massive amount of investment funds?

Of course not.

While it is often misleading to analogize (as you seem always to do) a country to a company, in this case the analogy is helpful. Just as a company that attracts lots of funds from investors is a company in which investors have great confidence, so too is a country that attracts lots of funds from investors a country in which investors have great confidence. And just as the receipt and use of such funds by a company is overwhelmingly likely to fuel that company’s growth and promote its health, the receipt and use of such funds by a country is likely to fuel that country’s growth and promote its health.

I would have thought that a savvy businessman such as yourself would understand this reality.

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